There is no doubt about it – things are tough out there.  Now more than ever, businesses are looking for ways to improve cashflow.  The following pointers may give you some food for thought:

1. Consider changing the filing frequency of the VAT return.  Merely filing late is not an option. 
2. If filing on an annual return basis, consider changing the amount of the monthly direct debit payment (caution – don’t end up with an end-of-year shortfall). 
3. If turnover is down, you may be entitled to switch to accounting for VAT on the cash-receipts basis.  This can be a significant advantage at a time when debtors may be slow to pay.  Switching is subject to Revenue agreement.   
4. If the business has both VAT-able and non VAT-able income, it is obliged to carry out a review of the apportionment rate at the end of each accounting period.  A detailed review may uncover new possibilities for VAT recovery. 
5. If a supply of services is going but the business is entitled to receive a payment on account, it may be permissible to seek remittance by issuing a “payment document” instead of a VAT invoice, thus deferring the requirement to account for sales VAT. 
6. Be attentive to the date on which VAT invoices are issued.  It may be possible to raise some sales invoices on the first day of a new VAT period instead of the last day of the previous one without causing a further one-month delay in payment by the customer. 
7. If it is necessary to write off a debt, be sure to claim bad debt relief in relation to the sales VAT on the original invoice.  This may soften the blow of the write off somewhat but is subject to quite strict conditions.  Bad debt relief can only apply when the business accounts for VAT on the invoice basis. 
8. Consider deregistering for VAT if the turnover falls below the obligatory VAT registration threshold (currently €37,500 p.a. for services and €75,000 p.a. for goods). 
9. If it becomes apparent that a VAT refund is due, apply for it on a timely basis.  Apart from the importance in cashflow terms, the four-year cap has to be taken into account. 
10. Ensure you are apprised of any potential advantages which changes in legislation or Revenue procedure may offer.  There will be significant changes in place of supply rules in relation to services with effect from 1 January 2010.  Some Irish businesses will be able to stop accounting for Irish VAT on supplies of services to non-Irish customers, while other Irish businesses will have to start accounting for VAT on the reverse-charge basis in relation to services received from outside of Ireland. 
11. Reclaim sales VAT on deposits taken where the supply does not subsequently take place. 
12. It is now possible to recover VAT in relation to expenditure on conference accommodation and the purchase of certain cars (both subject to conditions).  Tour operators are also entitled to claim VAT in relation to certain overheads. 
13. Recover input VAT incurred in other jurisdictions.  The Eighth EU Directive procedure is set to improve significantly with effect from 1 January 2010. 
14. If a business restructure involves a disposal of immovable property (even to a spouse) remember that there may be VAT implications even if there the transfer does not crystallise other taxes.  Similarly renting out a property pending a sale may give rise to VAT issues, since renting is prima facie an exempt activity. 
15. If a business does encounter difficulty in dealing with its obligations vis-à-vis Revenue, take a proactive rather than an ostrich approach.  Revenue has indicated that it is “disposed to working with … businesses and tax payers to find a way through … difficulties, provided that there is a positive and honest engagement with Revenue and the fundamentals of the underlying business are sound”. 

If you need further information on any of the above, don’t hesitate to contact us.

Ryan & Crowley Chartered Accountants
13 July 2009


Ryan & Crowley Chartered Accountants, Abercorn House, 57 Charleston Road, Dublin 6
Tel: 01-4975859 Fax: 01 4977782 Email: info@ryanandcrowley.com Web: www.ryanandcrowley.com
Source: Dermot O'Brien, Dermot O'Brien & Associates, Specialist VAT & RCT Consultants www.dermotobrien.biz