For the purposes of the suspension of interest, an SME is a business with turnover of less than €3 million which is not dealt with by either Revenue’s Large Corporates Division or Medium Enterprises Division.
Importantly, Revenue still requires all businesses experiencing temporary cash flow difficulties to continue to send in tax returns on time.
If key personnel are unavailable, best estimates can be used to prepare the VAT returns and self-corrected subsequently without penalty if required.
Existing tax clearance and RCT rate status will remain in place over the coming months and will not be impacted by availing of any of the measures as outlined above.
Revenue will continue to prioritise the approval and processing of VAT refunds to taxpayers. Where checks are necessary to allow repayment/refund claims, they will be conducted via MyEnquiries service or by telephone. Business should review and follow up on any outstanding VAT refunds for prior periods in light of this and seek to progress/expedite any open aspect queries.
As the economic impact of Covid 19 deepens, many business will unfortunately suffer increased bad debts.
Remember that a VAT deduction can be claimed for the VAT component of the write off by adjusting the current VAT return for the period in which the debt is written off.
EVR reclaims allow a business to request a refund of VAT which they have been correctly charged by a supplier based in another EU Member State. A business should review their records to see if any such claims can be made. You can submit a maximum of 5 claims in any one calendar year.
A cash receipts basis of accounting for VAT may be used where either 90% of sales are to non-registered persons or gross turnover is less than €2million per annum.
The cashflow benefit under the cash receipts basis is that VAT is due at the point of receipt from the customer, not on invoicing.
With declining sales, more businesses may be eligible to switch to the cash receipts basis.
Also, consider whether it is possible to switch from bi-monthly VAT filings to:
For taxpayers in a permanent VAT refund position an application may be made to Revenue to lodge monthly VAT returns which should also improve cash flow.
Remember where an invoice has not been paid within 6 months an adjustment must be made to the VAT return to repay the VAT reclaimed to Revenue.
This has always been and is likely to remain an area of focus for Revenue.
Download PDF of the Tax Issue - April 2020
