Cash flow problems

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If you are having cash flow difficulties and your business meets certain criteria you may be eligible for the cash basis for returning VAT on sales.

• Is your annual turnover under €1,000,000?
• Are 90% or more of your sales to customers who are not registered for VAT, or are not entitled to claim a full deduction of VAT?

If the answer is yes to one of the above questions, you can apply in writing to your local Revenue District confirming that you meet either one of the above conditions. If you are found to be eligible for the Cash Basis you will be notified with an effective date. You will then only need to include VAT on Sales on future Vat Returns when and only the cash is received. Be careful not to include sales you had already accounted for while on the Invoice Basis.

It is important to note the following points:

• You must continue to issue a VAT invoice when a customer is registered for VAT regardless of the accounting basis applied.
• You cannot apply the Cash Basis if your customer is a connected party or for construction services supplied by a sub-contractor to a principal contractor.
• Finally in the event of a change in the VAT rates, regardless of the accounting basis, you must apply the revised rate to the time the goods and services were actually supplied and not the time that the payment was received (if this is later).

For further information, please visit the Revenue website or contact Sarah Gallagher, Manager - OSK Audit.

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