Filing VAT returns can be a struggle for some businesses, especially startups. It’s important to ensure you’re compliant with the Revenue’s requirements with regards to VAT returns. Mistakes can be costly, so your first point of focus should be to understand your VAT obligations.
This article will cover VAT returns and guide you on how to file your returns correctly.
What is VAT?
Value Added Tax (VAT) is a tax charged on goods and services sold within Ireland. Manufacturers, wholesalers, and retailers collect VAT from final consumers and remit it to Revenue.
The current standard VAT rate in Ireland is 23%. You can find specific VAT charged on various goods here and for the supply of services on this link.
How Often Are You Required to File VAT Returns?
For taxpayers with a yearly VAT liability of below €3,000, you can file your VAT returns bi-annually. If you are a trader with annual liabilities between €3,000 and €14,400, you’ll be expected to file your VAT returns every four months.
However, you can make a request to file your VAT returns once a year under specific circumstances.
You should file electronic VAT returns within 23 days of the end of the bi-monthly VAT period. Manual returns should be filed by the 19th of the month following the taxable period. But only VAT-registered taxpayers who lack the competence to file their returns electronically are allowed manual filing. The standard is mandatory e-filing.
Irish VAT Penalties
You can get penalized for failing to comply with VAT return obligations.
Revenue charges a standard penalty of €4,000 if you fail to:
- Register your business for VAT
- Comply with invoicing requirements
- Meet VAT returns deadlines
- Maintain proper books and records
Additionally, you can get charged interest if you pay your VAT late. The interest rate is 0.0274% per day on unpaid sums.
Tips to Ensure You Are VAT Tax Compliant
So, how can you ensure that you meet your VAT obligations? Here are a few tips that you’ll find useful:
- VAT Registration: Always ensure that you understand your VAT registration thresholds and register as soon as you exceed them. It’s advisable to register for VAT when setting up your business so you may be able to claim VAT on set-up costs.
- Filing VAT Returns: Revenue doesn’t require you to submit supporting invoices when filing VAT returns. But they can raise queries on the voices. Always retain your invoices for up to six years (the required time period), ensure every supplier’s invoice is valid, and respond to queries from Revenue as soon as you can.
- Other Tax Obligations: You should also ensure that you file annual returns of trading details. Additionally, you should file Intrastat and VIES returns if you do cross-border EU transactions.
- Revenue Authorizations: Always monitor the expiry of relevant authorizations issued by Revenue and apply for renewal in good time. If your business no longer qualifies for an authorization, ensure that you inform Revenue before a penalty is imposed on your business.
VAT returns can be quite complicated. It’s advisable to get professional VAT tax advice from qualified accountants.
We Can Help You With Your VAT Returns
We are VAT returns experts.
We can help you in filing your returns the right way. Coffey & Co. has been in the industry for more than a decade and has helped many Irish businesses to file their VAT returns. We have assisted both domestic and international companies in Ireland.