In these troubled times, legitimate ways of improving cashflow are very welcome.
Some VAT possibilities for consideration are:
- While VAT returns are normally filed bi-monthly, less frequent filing options are also possible, from every four months to annually, if certain criteria (e.g. annual VAT liability within certain ranges; certain monthly direct debit payments etc.) are met.
- The obligatory registration thresholds are €75,000 for goods and €37,500 for services. If turnover falls below these levels, consider whether deregistration makes sense.
- Can the “cash receipts” basis apply? Even if it has not before, remember it applies if either more than 90% of sales are to unregistered persons or annual turnover is less than €1 million. As falling sales and rising debtor days are more common, not having to account for VAT on sales invoices issued until payment is received is welcome, particularly as VAT inputs on purchase invoices received can be claimed before payment is made.
- If “cash receipts” cannot apply, consider whether there is a continuous supply (i.e. where progress payments are sought during the course of a project). If so, issuing a request for payment (instead of a VAT invoice) means that VAT is only due when payment is received. This will not suit all businesses.
- If VAT was returned on invoices issued and a debtor is unlikely to pay, bad debt relief can apply and a refund claimed. Certain conditions must be met.
- If possible, issue invoices in the early days of a “new” VAT period rather than the last few days of an “old” one.
- Can the VAT 13B authorisation apply (i.e. over 75% of turnover is from export sales)? Consider also the reverse charge rules for cross-border supplies and domestic property/construction supplies. In such cases, typically neither purchase nor sales VAT need be paid over.
- Refunds of VAT incurred in other EU Member States can now be made through ROS (“8th Directive” reclaims), which is much faster than before.
- Property developers that rent out residential property typically trigger an input VAT clawback but that can usually be spread over a number of years
- Have all VAT input credits and refunds due been claimed fully? There is a four-year time limit for old claims so consider any VAT law changes since 2008. Property is a complex area and refunds due are often overlooked.