vat reclaimed on business that stopped trading?

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bongo101

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Hi, im just setting up a business as a sole trader,
i went in to get a vat no. today and one thing she said to me is, if my business folds in the first 5 years i have to repay all vat i claimed back from revenue?
can anyone shed light on this rule? searched here and revenue?

i will be a wholesaler (middleman), does that include all the vat i reclaim on my purchases for resale or just business related? (eg. buying a printer) it could be a big sum of money!

any ideas? or links to info?
thanks
 
i thought it abit much, but didnt question her, this woman worked in the revenue office in wexford, maybe its something coming in the forthcoming budget???
 
It's 3 years and it only applies where your turnover is below the relevant threshold but you have elected to register for VAT. It's to stop people registering VAT, reclaiming tons of VAT from goods etc bought at the commencement and then deregistering immediately (or shortly) afterwards.

The section below doesn't actually mention a business ceasing but I know from personal experience that Revenue treat it as one and the same

Also, in the case I dealt with, we were able to prove that the VAT reclaims were genuine and in the normal course of business and so Revenue didn't chase the money

From Revenue VAT Guide (Sect 2.18)

A person who has elected to register for VAT may cancel his or her registration by arrangement with the relevant Revenue District. It is a condition of such cancellation that he/she pays to Revenue any excess of VAT refunded to him/her over the tax paid for the taxable periods during which the election had effect or three years prior to the date of application for cancellation, whichever is the lesser
 
A low level Revenue official providing bogus information to a taxpayer...surprise surprise
 
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