The VAT Practice,
The White House, Cloncorban, Rossmore, Clonakilty,
Co. Cork
Principal: Nicholas Ryan
Tel: +353 (0)23 8838181
Mob: +353 (0)83 3340324
Fax: +353 (0)23 8838181
Email : info@thevatpractice.ie
Welcome to the VAT Practice blog. Our aim is for our blog to provide you with access to: Hot topics – which features regularly updated information, ideas and comment from The VAT Practice on Irish and international VAT issues. Talk to us – businesses can provide comment on our articles in Hot Topics and enter […]
Today, the following announcement with regard to VAT were made:
The 95 rate for the travel industry and related services is to remain.
The farmers flat rate addition will increase form 5 to 5.2% with effect from 1 January 2015.
We should expect other announcements with the release of the Finance Bill.
At the time of writing this I do not know what changes have been announced, if any, and I often wonder what could have been done from a VAT perspective to stimulate growth or improve the current system . Therefore, these are my thoughts on some options for change that I believe might have legs and could stimulate growth and/or simplify VAT for a number of business sectors.
Travel industry: For travel service providers the continuation of the reduced rate in the tourist sector needs to remain in place as the benefits are far higher than originally expected.
For those operating under the margin scheme, the application of the higher rate to the margin seems to contradict the use of the second reduced applied to those services bought in to create the overall package. Therefore I would consider the following options:
• Apply the second reduced rate to the margin – this could provide a valuable breathing space to Irish travel service providers in a very competitive global industry.
• Treat the package as a multiple supply and allow an apportionment of the margin by the VAT rates applying to the elements bought in.
• Passenger transport services – apply the zero rate of VAT where the transport services are for tourist purposes; this could also create a level playing field with travel providers within the EU.
• Consider removing the differentiation between in house and bought in supplies of travel services.
No business wants to discover it is VAT non-compliant at the hands of the tax authorities which could have a significant detrimental impact to its bottom line. Nor does a business want to miss a potential for savings and cost efficiencies by not identifying opportunities for same or for avoiding future complications by taking remedial action. Now is the right time to complete a VAT health check to review the businesses processes.
Here are some questions that should trigger the need to complete a VAT health check
• Not had a Revenue audit or query for a while?
• Recently changed focus/direction or developed a new product/income stream?
• Acquired another business, re-structured or expanded?
• Operate a VAT compliance scheme or uses a dual use method?
• Your activities are subject to VAT at different VAT rates?
The VAT Practice is on the look out for the right person to join the team. Would you be interested in becoming part of a progressive VAT practice? We are interested in hearing from anyone with three to four years plus experience in advising on Irish, UK and International VAT matters.