Many businesses are facing decreased turnover levels and are considering deregistering for VAT. Are there any clawbacks of VAT previously claimed? This depends on whether the business elected to register for VAT.
A business can elect to be registered for VAT even though turnover is below the thresholds for registration. A business which elected to register for VAT may cancel registration by arrangement with the relevant Revenue District. However, it can result in a VAT liability. Any excess of VAT refunded over VAT paid during the 3 years prior to the cancellation (or the period of election if less) must be paid to the Revenue.
If turnover goes below the threshold, a business may also cancel VAT registration. A clawback will not occur as long as the business didn’t initially elect to register for VAT.
Important points to note:
- Check the TR1 or TR2 that was submitted to the Revenue on registration to confirm whether you elected to register for VAT.
- Even if turnover falls below the threshold, a business may still be obliged to be VAT registered e.g. the business receives fourth schedule services.
- A de-registered business must constantly analyse turnover and monitor whether or not it is necessary to register for VAT again.
Ceasing to trade
When a business ceases to trade, the Revenue should be notified as soon as possible so that the VAT registration number can be cancelled. Otherwise, the Revenue will continue to issue VAT returns, and demands for estimated liability will automatically be issued if the VAT returns are not submitted.
A copy of the relevant form TRCN1 can be found on www.revenue.ie.
See also:
We have a Partnership company that we intend to cease along with it VAT registration and instead we have opened a limited company.
The Partnership was used to set things up mainly, so we have received more from VAT than we paid. On ceasation of the Partnership and its VAT number, will we have to refund the difference to the revenue?
Thanks for you help.
Hi Bernard,
Thanks for your comment.
Normally when sole trades are incorporated the trade in viewed by the Revenue Commissioners as continuing and so there is no review of the sole traders VAT histroy.
Should you have any other queries please don’t hesitate to contact us.
David
Hello,
If I cease my VAT registration will I have to pay back VAT claims I made as a sole trader while spending money on Facebook adverts?
Adam,
You may have to but i do not have full information to advise you.
Seamus