VAT Exempt question

I

irishbogger

Registered User
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Hi all,
I am a sole trader, running 2 businesses. One it an IT consultancy and I am VAT registered (I'll tell you another time why I mention this, depending on the answer I get below)

My other business is a boat charter service, which I just realised, according to Revenue, is VAT Exempt. Up until now, I was paying VAT on any purchases, and not charging customers VAT as I don't reach the threshold.

However, if I register the VAT exempt business for VAT (or do I just not register it?), is there any advantage? Can I reclaim any VAT back on purchases for this business? Or, can I ask suppliers that they don't charge me VAT? Or is the answer so both of those questions 'NO'?

For what it's worth, I'm guessing and presuming that the answer to both above is 'NO', but would like to hear from people in the know.

Many thanks.
 
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irishbogger said:
However, if I register the VAT exempt business for VAT (or do I just not register it?), is there any advantage?
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It depends on whether it's VAT exempt, or 0% VAT.
If exempt, no advantage.
If 0%, you claim the vat back on purchases, but there's no VAT charged on your sales.
 
Why do you think it is Exempt? I think, reduced rate applies.

I'm on less sure ground here, but I would have thought as a person registered for VAT, all your activities (consultancy and hiring out) were caught from that day of registration.
 
RedOnion said:
It depends on whether it's VAT exempt, or 0% VAT.
If exempt, no advantage.
If 0%, you claim the vat back on purchases, but there's no VAT charged on your sales.
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It's VAT excempt according to revenue. So no advantage, I guess!
 
Setanta12 said:
Why do you think it is Exempt? I think, reduced rate applies.

I'm on less sure ground here, but I would have thought as a person registered for VAT, all your activities (consultancy and hiring out) were caught from that day of registration.
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Are you sure?

My IT business is VAT registered (sole trader so PPS) and I was asked for the name of the business.

I made no mention of the boat charter business, but I see where you're coming from as a sole trader. Not an issue now as 8 won't be trading again until June, but would appreciate clarification.
 
Setanta12 said:
I'm on less sure ground here, but I would have thought as a person registered for VAT, all your activities (consultancy and hiring out) were caught from that day of registration.
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Yes, correct. I completely missed the fact both were sole trades (I'm used to IT consultants being limited companies).
 
RedOnion said:
Yes, correct. I completely missed the fact both were sole trades (I'm used to IT consultants being limited companies).
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So both businesses being sole trader, are you saying that I am liable to charge (and hence claim) VAT on both businesses? Sorry, just sort of confused by your post.
 
irishbogger said:
So both businesses being sole trader, are you saying that I am liable to charge (and hence claim) VAT on both businesses? Sorry, just sort of confused by your post.
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Sorry, poor wording on my part.

Because they are both sole trader, you are already registered for VAT for both.
However, you still have 2 businesses, 1 of which appears to be VAT exempt, but it's still registered. Just you can't claim back vat related to that business if the services you sell are exempt.

This is a common enough scenario; e.g a publican (vatable) that's also an undertaker (exempt).
 
RedOnion said:
Sorry, poor wording on my part.

Because they are both sole trader, you are already registered for VAT for both.
However, you still have 2 businesses, 1 of which appears to be VAT exempt, but it's still registered. Just you can't claim back vat related to that business if the services you sell are exempt.

This is a common enough scenario; e.g a publican (vatable) that's also an undertaker (exempt).
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Gotcha, thanks! You had me worried.

Good thing that the 2nd business (charter) is VAT exempt, in that case.... so if I do nothing else, i'm doing everything correct, right?
As in...
1st business VAT registered - Charge / Reclaim VAT (IT)
2nd business also VAT registered (which you just educated me to) - Don't charge VAT, but can't reclaim VAT from expenses (charter boat sightseeing)
 
And just to add.... given that eventhough the 2nd business is VAT registered, I can't purchase items from the UK at 0% VAT (Intra)? (Expenses directly related to the 2nd business) - Again, it makes sense that the answer is 'NO' .... but just incase!!
 
But again, why is this exempt exactly? I think there's different treatment if you're hiring it out with yourself as a driver for a few hours, than if you rent it out for a few days/weeks,
 
Setanta12 said:
But again, why is this exempt exactly? I think there's different treatment if you're hiring it out with yourself as a driver for a few hours, than if you rent it out for a few days/weeks,
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I'm not looking for advise on whether the business is exempt or not, it is... I rang Revenue for confirmation.

I skipper the boat and take people out on sightseeing trips. I don't 'hire' the boat out (or 'bareboat charter' as it's known in the industry)
 
I'm wondering if anyone can clarify the 0% VAT Intra-EU purchases for the boat business (expenses).

For clarification, here is my situation:



My main business is IT related, so this is why I became VAT registered.

Now, I also run a part-time business April - September annually. (sightseeing boat charter). It is a VAT exempt business (I know this for sure, got clarification from Revenue). So, with this, I cannot claim VAT back, but I do not charge VAT.

However, someone told me that as a sole trader, it's me whose VAT registered, rather than the IT business (this makes sense, my VAT no. is my PPS no.)

For the IT business, I understand the 0% VAT Intra-EU (and how to account / submit on my VAT3) - no problems there.

My query: For the boat charter business (VAT exempt), can I still pay 0% VAT on Intra-EU purchases, which are solely a business expense (ie. lifejackets) - Almost all of my expense purchases are from the UK, so would be nice to pay 0% VAT.
If the answer is YES, presumably I still account for it in my VAT3 return (T1 / T2 and then the 'Goods from Intra-EU Countries')

Many thanks.
 
Ah, RedOnion, thanks for that. When you initially quoted "Actually, I believe you should" - I thought you meant I should pay 0% VAT and that's it.

So, you're saying...
I pay 0% VAT in the UK
But I then add 23% VAT, pay Revenue that, and don't claim it back?

So, in theory, i'd be just better off paying the UK VAT and not mentioning my VAT number at all to the UK source? (If this is allowed)
 
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