Vat audit
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
28 July 2012
What are the check list of VAT Audit?
28 July 2012
VAT compliance checklist
Name of entity_______________________________
Irish VAT number (if applicable):
VAT group remitter name and number (if applicable):
Period of review:
Checklist completed by:
Date:
Please supply the following when returning this checklist
a copies of all VAT returns and annual returns of trading details for the period under review;
and
b copies of ROS printouts for the period under review showing:
• VAT returns submission dates;
• VAT charges and collections;
• VAT payments; and
• VAT refunds.
Should you wish to provide additional information that may be relevant to the review, or
comment on any of the questions asked in the checklist, please do so, on the final page.
Introduction
The purpose of this checklist is to assist individuals and corporates in considering their VAT
compliance under the terms of Irish VAT legislation and regulations and to form part of the
representations made to us.
User of checklist
The checklist is designed for completion by a relatively senior member of staff. It is expected
that in most cases this will be the financial accountant who should liaise as necessary with other
members of management in order to complete the checklist.
All questions on the checklist should be answered.
It is stressed that this checklist is not intended to be nor is it a substitute for a complete review
of your VAT compliance by specialists in this area.
The checklist is based on VAT legislation and regulations in force when created.
Health warning
Revenue audits are increasingly concentrating on VAT. This is on the basis that VAT audits
often produce the highest tax yield and the most issues and discrepancies. In this context, it is
important to take steps to ensure the accuracy of VAT declarations and clarify any uncertainties
in VAT treatment in advance of such audits. Company directors will wish to comply with
taxation law.
How we can assist you
We pride ourselves as a firm with a depth of knowledge and expertise in many disciplines
including VAT. Our specialists in VAT are available to assist our clients with any questions or
problems they have in this area. Such questions or problems may include:
• areas of doubt you may have regarding your compliance with VAT legislation and regulations;
• review and advice on VAT areas where VAT legislation/regulations have not been complied
with; or
• general VAT advice on unusual transactions or situations.
1 VAT registration
Introduction
Persons established in Ireland are obliged to register for VAT if:
• turnover from supplies of taxable goods in Ireland exceeds €75,000 (€70,000 prior to May 2008) in the last 12 months;
• turnover from supplies of taxable services in Ireland exceeds €37,500 (€35,000 prior to May 2008) in the last 12 months;
• turnover from supplies of both taxable services and taxable goods in Ireland exceeds €37,500 (€35,000 prior to May 2008) in the last 12
months;
• they make intra-community acquisitions of goods, the total value of which exceeds €41,000 in the previous 12 months; or
• they receive any taxable services from a person established outside of Ireland.
Persons not established in Ireland will generally be required to register for VAT if they make any taxable supply of goods or services, any
acquisition of goods or receive any taxable services in Ireland.
A person will also be required to register for VAT if the value of their “distance sales”, e.g. mail order, (see 3.3) into Ireland exceeds €35,000
in a calendar year.
Yes No
Are you registered for VAT?
If yes please go to 1.1
If not, are you obliged to registered in Ireland
1.1 Group registration
Group treatment is where a group of entities can be treated as a single taxable person for VAT. The treatment is
available to entities which are closely bound by economic, financial and management links which generally
means entities under common control.
Are you a member of a VAT group?
If yes, please attach the following details
• names of current VAT group members;
• VAT numbers of current VAT group members (if registered); and
• name of group remitter.
Have any entities joined or left the VAT group during the relevant period?
If yes, please attach details. If no, please go to 2.1
2 General
Part A – income and supplies
Yes No
2.1 VAT rates
Is the company charging the correct rate(s) of VAT on all supplies of goods and services?
If the rate of VAT changed during the review period, are you satisfied that this was dealt with correctly?
If you are unsure of the rate of VAT to be charged on any supplies please attach details for review by our VAT
specialists.
2.2 Supplies to “authorised exporters” (Section 56 – previously known as a VAT13A authorisation)
If the company supplies goods or services to “authorised exporters” (see 3.7) it should charge VAT at the zero
rate on such supplies provided, it holds a copy of the exporter’s current authorisation, quotes the authorisation
member on its invoice and the supply is not one of the following exceptions:
a the supply or hire of any passenger motor vehicle;
b the supply of petrol; or
c the provision of food, drink, accommodation, entertainment and other personal services.
Are you making sales to holders of a Section 56 authorisation number (i.e. suppliers who have received
authorisation in accordance with Section 56)?
If yes, is the company complying with the requirements?
Has VAT been charged in error to any such holders?
2.3 Multiple goods/services supplied for a single consideration
Where taxable goods or services, liable at different rates, are supplied as a package for a single consideration;
the consideration may need to be apportioned among the rates or may be subject to a single rate.
Have all such sales been dealt with correctly?
Yes No
2.4 Amount on which VAT is chargeable
Is VAT accounted for on the total sum receivable including all commissions, charges, expenses etc?
Where customers pay by credit card, is VAT accounted for on the total amount receivable and not just on the
discounted amount obtained from the credit card company?
2.5 Vouchers, tokens, coupons and loyalty type schemes
Does the business operate any promotion schemes involving the use of vouchers, tokens, coupons or other
loyalty type schemes (e.g. using electronic points)?
If yes please attach details.
Where vouchers are supplied to an intermediary who supplies them on to the customer in the course of
business, is VAT charged at standard rate?
2.6 Issue of sales invoices
Are invoices issued on time (i.e. by the 15th day of the month following the month of supply of the goods and
services or the receipt of a payment on account, whichever is earlier)?
2.7 Credit notes/discounts
Are credit notes issued or received?
If no, please go to 2.8
Have credit notes showing VAT at the appropriate rates(s) been issued for all adjustments made to the VAT
liability in respect of discounts and adjustments granted?
If the VAT rate has changed since you originally invoiced your customer, has the credit note issued at the “old”
rate?
Have appropriate restrictions on VAT inputs been made in respect of VAT credit notes received from suppliers?
A supplier may, with the agreement of his customer, issue a credit note without including VAT and no
adjustments would then be made to his liability. However, a VAT adjustment must be made on the credit note if
the supplier accounts for VAT on using the cash receipts basis.
2.8 Cash receipts basis
Businesses are eligible to apply to use the cash receipts basis of accounting for VAT where
i at least 90% of turnover is to unregistered persons; or
ii the expected annual turnover is not greater than €1,000,000 (€635,000 before March 2007).
Do you account for VAT on a cash receipts basis?
If no, please go to 2.9
Have you received written approval from the Revenue commissioners to account for VAT on the cash receipts
basis?
Do you monitor your turnover level to verify that you are still entitled to the cash receipts basis?
You are obliged to inform the Revenue commissioners when for a period of four consecutive months your
turnover is of such a level that if it were to continue at this level or exceed this level for the next twelve months,
the €1,000,000 threshold would be exceeded (€635,00 before March 2007)
If you are a member of a VAT group and operating the cash receipts basis, are all of the other members also
using the cash receipts basis?
2.9 Intra-group management fees
Has VAT been accounted for on any management fees (e.g. for staff, or computer or administrative services)
levied to other companies or affiliates (excluding those that are members of the same VAT group)?
Even if the company is a member of a group of companies which has a group registration for VAT purposes,
VAT must be accounted for on all transactions including management fees, with companies outside the VAT
registered group and on all supplies of immovable goods(freehold sales, surrenders, assignments and long
leases) whether these are made with companies in the VAT group or not.
Yes No
2.10 Sundry income
Are you accounting for VAT on sundry income, e.g, phone box receipts, toilet and vending machine receipts?
Has VAT been accounted on the disposal of obsolete stocks or business assets?
2.11 Staff canteen
VAT must be accounted for on canteen receipts or if the canteen is fully subsidised, VAT may need to be
accounted for on the costs of running the canteen.
Do you operate a staff canteen?
If no, please go to 2.12
If canteen facilities are being provided for staff, is VAT being properly accounted for?
2.12 Internet/electronic commerce
Do you supply goods or services from orders taken over the internet?
If no, please go to 2.13
Has VAT been accounted on these transactions (where appropriate)?
Do you supply services or digitised goods (e.g. information, software) over the Internet for a customer to
download for a fee?
If yes please attach details of the nature of the services and VAT treatment taken.
2.13 Bad debts
Has the company incurred bad debts?
If no, please go to 2.14
Has VAT credit been claimed in respect of known bad debts written off?
Is there adequate documentation to support the claim for this credit?
Bad debt relief cannot be claimed on long-term lettings of land and buildings. Are you satisfied that bad debt
relief has not been claimed on such lettings?
Have you considered connected parties?
Do you account for VAT when a bad debt is recovered?
Part B – purchases and VAT deduction
2.14 Deduction of VAT
VAT is deductible in respect of costs attributable to taxable or qualifying activities. VAT is not deductible on
expenditure that is attributable to exempt or non-business activities.
Do you operate any exempt or non-business activities?
If no, please to 2.15
Has the business claimed VAT on expenditure not relating to its taxable or qualifying activities?
If the business has both taxable and exempt (or non-business) activities, has input VAT been correctly allocated
to each?
If VAT has been incurred on costs associated with both vatable and exempt activities, has the VAT been
correctly apportioned? Please give details and confirm if Revenue approval was obtained
Has the recoverable proportion been reviewed to ensure the percentage recovered is reasonable?
Yes No
2.15 Goods/services for which VAT cannot be claimed
VAT cannot be claimed in respect of the following goods and services (except in certain circumstances):
• food, drink, accommodation* or other personal services provided to management or staff;
• entertainment; (both staff and customers);
• petrol; and
• the purchase, hire or lease of vehicles designed for carrying passengers (e.g. motor cars)**.
* VAT may be claimed on accommodation at certain qualifying conferences
Are you satisfied that VAT input credit has not been claimed in respect of any of these costs?
**20% of the VAT incurred can be claimed on certain cars used mainly (60%) for business purposes, if the car is first registered after 1
January 2009
2.16 Share transactions
Generally speaking VAT is not recoverable in relation to most share and other security transactions.
Have any shares, debentures or other securities been issued, sold or otherwise dealt with in the period?
If no, please go to 2.17
Has VAT been claimed in relation to expenditure incurred in connection with share transactions or transactions
involving stocks, debentures or other securities?
2.17 Evidence for deduction of VAT
Are you satisfied that the company is in possession of satisfactory evidence in the form of VAT invoices,
customs documents or other required documentation to support any claims made for VAT?
Part C – general miscellaneous provisions
2.18 Transfer of business
Have you acquired a ‘business’ or part thereof from a VAT registered person in the last three financial periods?
If no, please go to 2.19
If yes, was VAT reclaimed on the transfer of those assets?
Have you transferred assets as a transfer of a business or part thereof to a VAT registered person in the last
financial period?
Was VAT charged?
Did you acquire an interest in a property as part of the transfer of the business?
Did you transfer an interest in a property as part of the transfer of business?
Please give further details, where appropriate.
Are you involved in Retail Sales?
If no, go to 2.20
2.19 Retailers
Retail scheme
Are the goods and/or services you sell subject to VAT at different rates?
If no, please go to the question related to daily gross takings.
Do you account for VAT using a point of sale system?
Do you use a standard Revenue retail scheme?
Are you satisfied you are using the scheme appropriate to your level of turnover?
If no, please go to the question related to daily gross takings.
Do you use a customised or modified retail scheme?
Have you obtained Revenue approval to use a customised or modified retail scheme?
If yes, please attach details of the scheme
Yes No
Daily gross takings
When determining the daily gross takings do you include credit sales?
Do you adjust takings for till ‘shorts’ or ‘overs’?
Expected selling prices/mark-ups
If a retail scheme is used to calculate VAT on sales, are mark-ups or expected sales on the goods at different
rates of VAT realistic?
Stock adjustments
If your retail scheme requires a stock adjustment either annually or after six VAT periods, has this been done?
Wastage/Stock losses
If your scheme uses expected sales, have they been adjusted for known losses such as wastage, breakage and
price reductions?
Is the expected sale value adjusted to compensate for unknown losses such as shrinkage and theft?
Point of sale
If you operate a point of sale system are you satisfied that the correct VAT rates are assigned to products?
If you use electronic point of sale equipment do you have dummy codes for products that will not scan and
cannot be assigned to a specific product at the till?
If yes, please attach brief details of how you treat these sales for VAT purposes.
Are you satisfied that you are properly accounting for VAT in this situation?
2.20 Clubs
Do you operate a club?
If no, go to 3.
If turnover exceeds the registration threshold, then clubs must register and account for VAT on any business
activity (e.g. a bar) or any supply made to members (e.g. the hire of tennis racquets) for a payment over and
above the annual membership fee.
For example, where the total annual taxable income from the provision of facilities for taking part in golf in a
member-owned or local authority golf course exceeds or is likely to exceed €37,500, it will become liable for VAT
at the 13.5% rate. This includes driving ranges and par 3 golf but not pitch and putt.
Are you satisfied that VAT is being properly accounted for and that input credit is being taken only on
expenditure incurred directly in connection with the taxable activities?
Where input credit has to be apportioned, for example for the bar portion of a clubhouse, are you satisfied that
this has been done correctly?
3 International trade
Do you buy or sell goods or services from/to customers outside of Ireland?
If no, please go to 4
3.1 Exports to outside the European Union
Do you sell goods to customers outside the EU?
If no, then please go to 3.2
Copies of sales invoices are not sufficient evidence for all exports on which zero-rating has been claimed.
Revenue requires that customs export documents (SAD forms) and proof of physical exportation be retained. In
the case of mail-order sales, certificates of posting, issued by the Post Office, are accepted in lieu of SAD
documents.
Are copies of customs export SAD documents/postal certificates available to support zero rating?
Yes No
3.2 Exports and other EU member states
Do you sell goods to VAT registered customers in other EU member states?
If no, please go to 3.3
Where the zero-rate has been charged on the export of goods to a VAT registered entity in another EU member
state has the company:
• obtained the customer’s foreign VAT number and satisfied itself that the number quoted is valid
• or the customer’s bona fide are established?
• quoted this foreign VAT number on its invoice to the customer?
• satisfied itself that the goods have been transported from Ireland?
Has VAT been charged on all despatches of goods to customers in other EU member state where the VAT
number of the purchaser was not obtained (subject to distance selling rules – see 3.3 below)?
3.3 Exports “distance sales” (mail order sales)
Do you sell goods to EU customers who are not VAT registered (private individuals) outside of Ireland.
If no, please go to 3.4
If the company supplies and delivers goods to customers in other EU member states, who are not VAT
registered it may be obliged to register in the country of its customer (subject to local thresholds).
Have you considered whether the company should be VAT registered abroad?
Have you considered whether you are required to register for VAT in another EU member state for distance
selling?
If applicable, please attach details of the value of sales to unregistered (private) customers in each State by
reference to calendar years.
3.4 Triangulation
Special rules govern the VAT treatment of ‘triangular transactions’. This refers to goods which are subject to a
transaction involving three different entities in three different EU countries. It is a simplification measure to relieve
traders of having to register for VAT in certain foreign countries.
Do you act as the intermediary in a triangular transactions and are you availing of the simplification where
available to avoid VAT registration in either the EU member state of dispatch or arrival of the goods?
If you are an intermediary, are you including the following on your sales invoices:
• the customers’ foreign VAT registration number; and
• the endorsement to advise your customer that this is a triangular transaction and that the simplification
applies.
3.5 Imports from outside the European Union
Have you imported any goods from outside the EU?
If no, please go to 3.6
Proper documentation must be retained in order to support claims for VAT input credit.
Are original VAT invoices and customs import SAD documents and deferred payment sheets/TAN Account
(where applicable) retained?
3.6 Imports (acquisitions) from other EU member states
Have you imported or acquired any goods from other EU member states?
If no, please go to 3.7
Companies who import goods from other EU member states must account for VAT on them on a “reverse
charge” basis, i.e. the recipient must self impose a VAT charge at the relevant rate.
Has this “acquisition VAT” been accounted for on goods imported from other member states?
3.7 Exports relief – “Section 13A authorisation” (now Section 56 VAT Consolidation Act 2010)
If a company supplies goods and at least 75% of its total turnover is derived from exports of goods (intra EU or
outside EU), it may apply for approval from Revenue to obtain goods and services from Irish suppliers and
import goods without incurring a VAT charge. (See exception – 2.2)
Has the company availed of this relief?
If no, please go to 3.8.
Is the authorisation up to date? (they are usually only valid for a period of two years, generally expiring at the end
of October).
Do you still qualify by satisfying the 75% test?
(Penalties apply if you do not notify Revenue when you no longer qualify for the authorisation)
Yes No
3.8 Foreign VAT
Has foreign VAT has been incurred?
If no, please go to 3.9.
If yes, have steps been taken to identify it separately?
If reclaimable, have you recovered the VAT from the foreign Revenue Authority (by making a claim through the
Irish Revenue online “ROS” system for VAT incurred in other EU countries)? (Deadline 30 September following
the end of the calendar year)
3.9 Overseas VAT registration
If you make a supply of goods in another EU member state where the goods are either purchased in that State,
taken from stock the company maintains there, or are installed there by the company, you may be required to
register for VAT in that country.
Do you make supplies of goods in another EU member state?
If no, please go to 4
If yes, have you considered whether you should register for VAT in that member state?
Please attach details if you consider you have a liability to register for VAT overseas and have not already done
so.
4 VAT and property transactions
Introduction
The VAT treatment of property transactions can be complex; we recommend that you seek professional advice
before undertaking any property-related transactions. As you may be aware new VAT on property rules were
introduced on 1 July 2008.
Where the company was involved in property transactions before 1 July 2008 please answer questions from
section 4A and where the company was involved in property transactions from 1July 2008 please answer
questions from section 4B.
Has the company been involved in any property-related transactions during the examined period?
(Sales, short-term letting, long term letting, assignment or surrender of property, new lettings)
If no, please go to 5.1
4A Property transactions before 1 July 2008
The VAT treatment on the letting of property can vary depending on the lease term as follows:
• short-term leases (less than 10 years)
• long-term leases (10 years or more)
4A.1 Short term lease
Has the company granted any short-term leases of property?
If no, please go to 4A.2
In principle, short-term lettings are exempt from VAT but a landlord can elect to treat them as taxable. Such an
election would be made to preserve VAT previously claimed (avoid self supply) or enable VAT to be claimed on
related costs.
Has your company considered waiving VAT exemption and accounting for VAT to avoid having to bear the VAT
liability on deemed self supplies?
If the company has elected to waive the VAT exemption on short-term leases has the company accounted for
VAT (at the standard rate) on short-lease of all its properties. Are all short-term lettings taxed?
If the company has elected to waive the VAT exemption on short-term leases is the company ‘connected’ to the
tenant?
If so, does the tenant have full VAT recovery?
Where a short-term letting has been granted between two members of the same VAT group and either party
leaves the group or the group breaks up, has the landlord waived its exemption in respect of short-term lettings
at that stage so as to avoid a deemed self-supply and claw-back of the VAT claimed on acquisition
(development)?
Yes No
4A.2 Long term leases/property sales
Has the company granted any long-term leases of property?
If no, please go to 4A.3.
Has the company sold any property and if so has the company charged VAT on sales of the property?
Did the company charge VAT on the capitalised value of property leased under long-term leases?
“Economic value”
With effect from 25 March 2002, where a long-lease is being created, surrendered or assigned and where the
capitalised value of that lease is less than its economic value (defined below) then the transaction is regarded as
being exempt from VAT. There is no right to waive this exemption. Consequently, where the capitalised value is
less than the economic value, the person creating, surrendering or assigning the lease will lose their entitlement
to recover VAT incurred on the acquisition or development of their interest in the relevant property.
The “economic value” is defined as the amount on which VAT was incurred in respect of the acquisition and/or
development of the property.
Has the economic value test been considered in respect of long-term lettings?
Does the company claim VAT input credit on post letting expenses?
(The term post-letting expenses is used to describe certain expenses incurred by a landlord in respect of a
property he has let on a long lease, after the lease has been created)
Landlords are entitled to VAT recovery in respect of post letting expenditure. Is the company aware of this and
has it sought recovery of any such VAT incurred in the past?
A relief in Section 4A, VAT Act 1972, as amended, enabled a fully taxable lessee to account for the VAT arising
on the creation of a long lease on a reverse charge basis. Advance Revenue approval is required.
Was Section 4A relief availed of and did the company raise an appropriate invoice?
4A.3 Assignments
An assignment of an interest in property is valued in a similar manner to the creation of a long lease. In most
cases the assignee is accountable to Revenue for any VAT arising on a reverse charge basis.
Has the business acquired an interest in any property by way of assignment?
If no, Please go to 4A.4.
4A.4 Surrenders
The surrender of an interest in property is valued in a similar manner to the creation of a long lease. Surrender
includes abandonment, failure to exercise an option to extend the term, ejectment and forfeiture. In most cases
the landlord is accountable to the Revenue for any VAT arising on a reverse charge basis.
Has the business received back an interest property by way of surrender?
A matching deduction for the reverse charge VAT in respect of the surrender can be claimed, e.g. if the property
was to be used for a further taxable supply or a taxable purpose?
Are you satisfied that VAT has been accounted for correctly?
4A.5 Subsequent supplies of property (apart from surrenders)
Have you made a subsequent supply of property following surrender e.g. granted a new lease?
If no, please go to 4B.
If yes, are you satisfied that VAT has been accounted for correctly in respect of this supply? Particularly complex
rules apply to such transactions.
4A.6 Leases granted
Was the company granted any long leases in the period? If so please give further details.
4B Property transactions after 1 July 2008
Under the new rules property transactions can be broken down as follows:
• sales of properties:
− ‘new’ properties
− ‘old’ properties
• leasing of properties
− new leases
− transitional leases
Yes No
4B.1 Sale of ‘old’ property
Under the new rules the sale of an old property is VAT exempt. A property becomes ‘old’ 5 years
after ‘completion’ and is not 'significantly' developed in those years. A property is also ‘old’ for 2nd
and subsequent supplies if occupied for aggregate of 24 months or more. However, both parties
(vendor and purchaser) can jointly elect to charge VAT.
Did the company purchase/sell an ‘old’ property during the relevant period?
If no, please go to 4B.2.
If yes, was the transaction treated correctly for VAT purposes?
Please attach details of the VAT treatment.
4B.2 Sale of ‘new’ property
‘New’ properties are liable to VAT at 13.5%. A Property is ‘new’ once it has been developed or
redeveloped/transformed (made new). Partially completed buildings as well as developed land are always
liable to VAT at 13.5%.
Did the company purchase/sell a “new” property during the relevant period?
If no, please go to 4B.3.
If yes, was the transaction treated correctly for VAT purposes?
Please attach details of the VAT treatment.
4B.3 New leases
Under the new rules all leases created from 1 July 2008 are exempt from VAT. However, the landlord may ‘opt to
tax’ and charge VAT on rents at 21%. A landlord may not ‘opt to tax’ a letting or the option is cancelled where the
landlord and tenant are ‘connected’ unless the tenant has at least 90% VAT recovery.
Has the company granted or been granted a lease?
If no, please go to 4B.4.
If yes, was the transaction treated correctly for VAT purposes?
Please attach details of the VAT treatment.
4B.4 Transitional leases
Assignment/surrender of a lease originally created prior to 1 July 2008 is a supply of 'goods' where it occurs
within 20 years from the creation of the lease. Treatment depends on whether tenant had recovery or not
(taxable if recovery, exempt if no recovery). However both parties can jointly opt to tax - to avoid clawback of
VAT recovered on acquisition. If the parties opt, the assignment/surrender is VATable on the reverse charge
basis and the person making assignment/surrender must issue a document to the assignee/landlord.
Has the company, as either landlord or tenant, been involved in a surrender/assignment since 1 July 2008 of a
pre 1 July 2008 lease?
If no, please go to 4B.5.
If yes, was the transaction treated correctly for VAT purposes?
Please attach details of the VAT treatment.
4B.5 Capital Goods Scheme (CGS)
The new rules also introduced a CGS. The scheme provides for the annual adjustment of VAT deductibility in
respect of the acquisition, development or refurbishment costs of the ‘VAT life’ of a property. The VAT-life of
buildings is as follows:
• purchase of property: 20 intervals (almost 20 years); and
• refurbishment: 10 intervals.
Where a company has a capital good it should carry out an annual review
• VATable activity increases, owner may be entitled to a refund from Revenue; and
• VATable use decreases, owner may be required to make extra payments to Revenue.
In addition to the annual review the company is required by statute to hold a Capital Good Record for each
property and refurbishment. The capital good record should include the following:
• capital good details;
• VAT paid/reclaimed as input tax;
• VATable use per interval (and basis of calculation); and
• VAT adjustment per interval.
Where the company acquired/developed a property after 1 July 2008, does it hold a complete and up-to-date
Capital Good Record for each property/refurbishment?
If yes, please attach a copy of the capital good record
5 Accounting for VAT on services received from abroad
Yes No
5.1 General
With effect from 1 January 2010 companies must account for Irish VAT on a reverse charge basis on virtually all
services received from abroad. This also includes services previously known as “Fourth Schedule services” e.g.
most professional and consultancy type services
Companies who purchase taxable services from abroad must account for VAT on them on a “reverse charge”
basis, i.e. the recipient must self impose a VAT charge.
Has the company purchased any services from abroad?
If no, Please go to 6.1.
Are you satisfied that the receipt of services from aboard is being properly accounted for by your company?
5.2 Any services supplied to customers outside Ireland?
If yes, is Irish VAT charged?
If no VAT charged, please explain why.
6 Financial services
Certain financial services are exempt from VAT; if you are unsure what these services are, please let us know.
Generally input credit is not allowable in respect of such supplies. Where the services are supplied to customers
outside the European Union, however, input credit may be allowable.
Has the company supplied any financial services?
6.1 General
Have you provided any financial services to non-EU customers?
If no, please go to 6.2.
Have you claimed any input credit in relation to these supplies?
Other financial services are liable to VAT, e.g. lease rentals and fee income.
Have you accounted for VAT on any such income received?
6.2 Apportionment of credit
If you make both taxable supplies e.g. leasing of goods, and exempt supplies e.g. granting of credit or provision
or insurance, then you will be entitled to partial VAT recovery in respect of dual use costs. The deductible
proportion must reflect the extent to which such costs are used in generating taxable/qualifying activities and has
due regard to the range of that persons total supplies and activities.
Do you use a partial recovery method that includes the interest element of the credit or the full repayment
(interest plus capital)?
Do you carry out an annual review of the deductible proportion?
Are you satisfied that your method produces the optimum result?
Is the method in accordance with the latest legislation/statement of practice issued by Revenue?
6.3 Lease contracts
Have you issued any lease contracts?
If no, Please go to 6.4.
Do you have valid VAT invoices for all assets purchased and subsequently leased to third parties?
Have you issued the correct invoices/credit note in respect of disposals at the end of the lease?
Have you accounted for VAT on any advance rentals / deposits received?
Have you issued invoices to the lessees?
6.4 Hire purchase
For VAT purposes hire purchase contracts can be either an exempt supply of credit or a taxable supply of a
lease, depending on the structure of the contract. Are you satisfied you have applied the correct treatment to any
such contracts?
Yes No
6.5 Services received from abroad/Intra community acquisitions
Are you satisfied that your system is tracking services received from abroad and intra-community acquisitions?
7 VAT compliance
7.1 Preparation and submissions of VAT returns
Are VAT returns submitted and payment made to the Collector General on or before 19th (23rd if using ROS) of
the month following the period to which the return refers?
Are all relevant figures included on VAT returns?
(This includes intra-community supplies, acquisition and services received from abroad)
An additional return is required once annually showing the net value of sales, purchases, imports and intra EU
acquisition at each VAT rate.
Is the return (Annual Return of Trading Details) completed and submitted to the Revenue?
If you pay by direct debit, did your payments for the year amount to at least 80% of your actual liability in order to
avoid interest?
7.2 Underlying records
Is proper documentation retained in order to support claims for input credit?
Do the records comply with the VAT regulations?
The following should be noted;
• purchases records should distinguish between goods for resale and others;
• the records should reflect the different rates of VAT;
• the records should provide an “audit trail” to original documentation for purchases and to copy sales invoices;
and
• the records must be retained for a period of 6 years, unless specified approval has been received for a lesser
requirement.
In particular, original invoices must be available – copy invoices or microfilmed invoices are not sufficient in the
case of purchase documents.
Do you operate an EDI system?
Does the EDI system meet the Revenue Commissioners requirement for persons who issue invoices
electronically?
7.3 VIES returns
Does the business despatch goods or supply services to VAT registered customers in other EU member states?
If yes, does the business complete and file VIES returns to the VIMA Office of the Revenue Commissioners?
(VIES for services must be filed since 1 January 2010.)
Have all VIES returns been submitted within one month of the last day of return period?
7.4 Intrastat returns
If you supply goods to VAT registered customers in other EU countries or purchase goods from other EU
Countries, you must enter the details at boxes E1 or E2 as appropriate.
Do you complete these boxes?
If the value of a company’s supplies of goods to other EU member state exceeds €635,000 or acquisitions of
goods from other EU member state exceed €191,000 annually, an intrastat dispatches/arrivals return detailing
such supplies must be completed and submitted before the 10th working day after each month end.
Does this apply?
If no, please go to 7.5.
If yes, have all intrastat returns been submitted within due dates?
8 VAT audits
Yes No
Health warning: Revenue audits are increasingly concentrating on VAT and as a result allocating much of the
resources used at audits to the review of VAT. This is on the basis that VAT audits often produce the highest tax
yield and the most issues and discrepancies. In the context it is important to take steps to ensure the accuracy of
VAT declarations and clarify any uncertainties in VAT treatment in advance of such audits. Client directors will
wish to comply with taxation law.
Outstanding queries
Has the business had a Revenue VAT audit in the past three years?
If yes, what issues, if any, arose and are there any outstanding queries from that audit?
Have any rulings, directions or any concessions issues which affect the preparation of the VAT returns?
Have you made a formal “expression of doubt” to the Inspector of Taxes in relation to the VAT treatment any
issue or transactions?
If so, have you received a formal acknowledgement of the letter of “expression of doubt” from the tax authorities?
Are you familiar with the Revenue code of practice in relation to Audits?
9 Additional comments
9 Additional comments
Name of entity_______________________________
Irish VAT number (if applicable):
VAT group remitter name and number (if applicable):
Period of review:
Checklist completed by:
Date:
Please supply the following when returning this checklist
a copies of all VAT returns and annual returns of trading details for the period under review;
and
b copies of ROS printouts for the period under review showing:
• VAT returns submission dates;
• VAT charges and collections;
• VAT payments; and
• VAT refunds.
Should you wish to provide additional information that may be relevant to the review, or
comment on any of the questions asked in the checklist, please do so, on the final page.
Introduction
The purpose of this checklist is to assist individuals and corporates in considering their VAT
compliance under the terms of Irish VAT legislation and regulations and to form part of the
representations made to us.
User of checklist
The checklist is designed for completion by a relatively senior member of staff. It is expected
that in most cases this will be the financial accountant who should liaise as necessary with other
members of management in order to complete the checklist.
All questions on the checklist should be answered.
It is stressed that this checklist is not intended to be nor is it a substitute for a complete review
of your VAT compliance by specialists in this area.
The checklist is based on VAT legislation and regulations in force when created.
Health warning
Revenue audits are increasingly concentrating on VAT. This is on the basis that VAT audits
often produce the highest tax yield and the most issues and discrepancies. In this context, it is
important to take steps to ensure the accuracy of VAT declarations and clarify any uncertainties
in VAT treatment in advance of such audits. Company directors will wish to comply with
taxation law.
How we can assist you
We pride ourselves as a firm with a depth of knowledge and expertise in many disciplines
including VAT. Our specialists in VAT are available to assist our clients with any questions or
problems they have in this area. Such questions or problems may include:
• areas of doubt you may have regarding your compliance with VAT legislation and regulations;
• review and advice on VAT areas where VAT legislation/regulations have not been complied
with; or
• general VAT advice on unusual transactions or situations.
1 VAT registration
Introduction
Persons established in Ireland are obliged to register for VAT if:
• turnover from supplies of taxable goods in Ireland exceeds €75,000 (€70,000 prior to May 2008) in the last 12 months;
• turnover from supplies of taxable services in Ireland exceeds €37,500 (€35,000 prior to May 2008) in the last 12 months;
• turnover from supplies of both taxable services and taxable goods in Ireland exceeds €37,500 (€35,000 prior to May 2008) in the last 12
months;
• they make intra-community acquisitions of goods, the total value of which exceeds €41,000 in the previous 12 months; or
• they receive any taxable services from a person established outside of Ireland.
Persons not established in Ireland will generally be required to register for VAT if they make any taxable supply of goods or services, any
acquisition of goods or receive any taxable services in Ireland.
A person will also be required to register for VAT if the value of their “distance sales”, e.g. mail order, (see 3.3) into Ireland exceeds €35,000
in a calendar year.
Yes No
Are you registered for VAT?
If yes please go to 1.1
If not, are you obliged to registered in Ireland
1.1 Group registration
Group treatment is where a group of entities can be treated as a single taxable person for VAT. The treatment is
available to entities which are closely bound by economic, financial and management links which generally
means entities under common control.
Are you a member of a VAT group?
If yes, please attach the following details
• names of current VAT group members;
• VAT numbers of current VAT group members (if registered); and
• name of group remitter.
Have any entities joined or left the VAT group during the relevant period?
If yes, please attach details. If no, please go to 2.1
2 General
Part A – income and supplies
Yes No
2.1 VAT rates
Is the company charging the correct rate(s) of VAT on all supplies of goods and services?
If the rate of VAT changed during the review period, are you satisfied that this was dealt with correctly?
If you are unsure of the rate of VAT to be charged on any supplies please attach details for review by our VAT
specialists.
2.2 Supplies to “authorised exporters” (Section 56 – previously known as a VAT13A authorisation)
If the company supplies goods or services to “authorised exporters” (see 3.7) it should charge VAT at the zero
rate on such supplies provided, it holds a copy of the exporter’s current authorisation, quotes the authorisation
member on its invoice and the supply is not one of the following exceptions:
a the supply or hire of any passenger motor vehicle;
b the supply of petrol; or
c the provision of food, drink, accommodation, entertainment and other personal services.
Are you making sales to holders of a Section 56 authorisation number (i.e. suppliers who have received
authorisation in accordance with Section 56)?
If yes, is the company complying with the requirements?
Has VAT been charged in error to any such holders?
2.3 Multiple goods/services supplied for a single consideration
Where taxable goods or services, liable at different rates, are supplied as a package for a single consideration;
the consideration may need to be apportioned among the rates or may be subject to a single rate.
Have all such sales been dealt with correctly?
Yes No
2.4 Amount on which VAT is chargeable
Is VAT accounted for on the total sum receivable including all commissions, charges, expenses etc?
Where customers pay by credit card, is VAT accounted for on the total amount receivable and not just on the
discounted amount obtained from the credit card company?
2.5 Vouchers, tokens, coupons and loyalty type schemes
Does the business operate any promotion schemes involving the use of vouchers, tokens, coupons or other
loyalty type schemes (e.g. using electronic points)?
If yes please attach details.
Where vouchers are supplied to an intermediary who supplies them on to the customer in the course of
business, is VAT charged at standard rate?
2.6 Issue of sales invoices
Are invoices issued on time (i.e. by the 15th day of the month following the month of supply of the goods and
services or the receipt of a payment on account, whichever is earlier)?
2.7 Credit notes/discounts
Are credit notes issued or received?
If no, please go to 2.8
Have credit notes showing VAT at the appropriate rates(s) been issued for all adjustments made to the VAT
liability in respect of discounts and adjustments granted?
If the VAT rate has changed since you originally invoiced your customer, has the credit note issued at the “old”
rate?
Have appropriate restrictions on VAT inputs been made in respect of VAT credit notes received from suppliers?
A supplier may, with the agreement of his customer, issue a credit note without including VAT and no
adjustments would then be made to his liability. However, a VAT adjustment must be made on the credit note if
the supplier accounts for VAT on using the cash receipts basis.
2.8 Cash receipts basis
Businesses are eligible to apply to use the cash receipts basis of accounting for VAT where
i at least 90% of turnover is to unregistered persons; or
ii the expected annual turnover is not greater than €1,000,000 (€635,000 before March 2007).
Do you account for VAT on a cash receipts basis?
If no, please go to 2.9
Have you received written approval from the Revenue commissioners to account for VAT on the cash receipts
basis?
Do you monitor your turnover level to verify that you are still entitled to the cash receipts basis?
You are obliged to inform the Revenue commissioners when for a period of four consecutive months your
turnover is of such a level that if it were to continue at this level or exceed this level for the next twelve months,
the €1,000,000 threshold would be exceeded (€635,00 before March 2007)
If you are a member of a VAT group and operating the cash receipts basis, are all of the other members also
using the cash receipts basis?
2.9 Intra-group management fees
Has VAT been accounted for on any management fees (e.g. for staff, or computer or administrative services)
levied to other companies or affiliates (excluding those that are members of the same VAT group)?
Even if the company is a member of a group of companies which has a group registration for VAT purposes,
VAT must be accounted for on all transactions including management fees, with companies outside the VAT
registered group and on all supplies of immovable goods(freehold sales, surrenders, assignments and long
leases) whether these are made with companies in the VAT group or not.
Yes No
2.10 Sundry income
Are you accounting for VAT on sundry income, e.g, phone box receipts, toilet and vending machine receipts?
Has VAT been accounted on the disposal of obsolete stocks or business assets?
2.11 Staff canteen
VAT must be accounted for on canteen receipts or if the canteen is fully subsidised, VAT may need to be
accounted for on the costs of running the canteen.
Do you operate a staff canteen?
If no, please go to 2.12
If canteen facilities are being provided for staff, is VAT being properly accounted for?
2.12 Internet/electronic commerce
Do you supply goods or services from orders taken over the internet?
If no, please go to 2.13
Has VAT been accounted on these transactions (where appropriate)?
Do you supply services or digitised goods (e.g. information, software) over the Internet for a customer to
download for a fee?
If yes please attach details of the nature of the services and VAT treatment taken.
2.13 Bad debts
Has the company incurred bad debts?
If no, please go to 2.14
Has VAT credit been claimed in respect of known bad debts written off?
Is there adequate documentation to support the claim for this credit?
Bad debt relief cannot be claimed on long-term lettings of land and buildings. Are you satisfied that bad debt
relief has not been claimed on such lettings?
Have you considered connected parties?
Do you account for VAT when a bad debt is recovered?
Part B – purchases and VAT deduction
2.14 Deduction of VAT
VAT is deductible in respect of costs attributable to taxable or qualifying activities. VAT is not deductible on
expenditure that is attributable to exempt or non-business activities.
Do you operate any exempt or non-business activities?
If no, please to 2.15
Has the business claimed VAT on expenditure not relating to its taxable or qualifying activities?
If the business has both taxable and exempt (or non-business) activities, has input VAT been correctly allocated
to each?
If VAT has been incurred on costs associated with both vatable and exempt activities, has the VAT been
correctly apportioned? Please give details and confirm if Revenue approval was obtained
Has the recoverable proportion been reviewed to ensure the percentage recovered is reasonable?
Yes No
2.15 Goods/services for which VAT cannot be claimed
VAT cannot be claimed in respect of the following goods and services (except in certain circumstances):
• food, drink, accommodation* or other personal services provided to management or staff;
• entertainment; (both staff and customers);
• petrol; and
• the purchase, hire or lease of vehicles designed for carrying passengers (e.g. motor cars)**.
* VAT may be claimed on accommodation at certain qualifying conferences
Are you satisfied that VAT input credit has not been claimed in respect of any of these costs?
**20% of the VAT incurred can be claimed on certain cars used mainly (60%) for business purposes, if the car is first registered after 1
January 2009
2.16 Share transactions
Generally speaking VAT is not recoverable in relation to most share and other security transactions.
Have any shares, debentures or other securities been issued, sold or otherwise dealt with in the period?
If no, please go to 2.17
Has VAT been claimed in relation to expenditure incurred in connection with share transactions or transactions
involving stocks, debentures or other securities?
2.17 Evidence for deduction of VAT
Are you satisfied that the company is in possession of satisfactory evidence in the form of VAT invoices,
customs documents or other required documentation to support any claims made for VAT?
Part C – general miscellaneous provisions
2.18 Transfer of business
Have you acquired a ‘business’ or part thereof from a VAT registered person in the last three financial periods?
If no, please go to 2.19
If yes, was VAT reclaimed on the transfer of those assets?
Have you transferred assets as a transfer of a business or part thereof to a VAT registered person in the last
financial period?
Was VAT charged?
Did you acquire an interest in a property as part of the transfer of the business?
Did you transfer an interest in a property as part of the transfer of business?
Please give further details, where appropriate.
Are you involved in Retail Sales?
If no, go to 2.20
2.19 Retailers
Retail scheme
Are the goods and/or services you sell subject to VAT at different rates?
If no, please go to the question related to daily gross takings.
Do you account for VAT using a point of sale system?
Do you use a standard Revenue retail scheme?
Are you satisfied you are using the scheme appropriate to your level of turnover?
If no, please go to the question related to daily gross takings.
Do you use a customised or modified retail scheme?
Have you obtained Revenue approval to use a customised or modified retail scheme?
If yes, please attach details of the scheme
Yes No
Daily gross takings
When determining the daily gross takings do you include credit sales?
Do you adjust takings for till ‘shorts’ or ‘overs’?
Expected selling prices/mark-ups
If a retail scheme is used to calculate VAT on sales, are mark-ups or expected sales on the goods at different
rates of VAT realistic?
Stock adjustments
If your retail scheme requires a stock adjustment either annually or after six VAT periods, has this been done?
Wastage/Stock losses
If your scheme uses expected sales, have they been adjusted for known losses such as wastage, breakage and
price reductions?
Is the expected sale value adjusted to compensate for unknown losses such as shrinkage and theft?
Point of sale
If you operate a point of sale system are you satisfied that the correct VAT rates are assigned to products?
If you use electronic point of sale equipment do you have dummy codes for products that will not scan and
cannot be assigned to a specific product at the till?
If yes, please attach brief details of how you treat these sales for VAT purposes.
Are you satisfied that you are properly accounting for VAT in this situation?
2.20 Clubs
Do you operate a club?
If no, go to 3.
If turnover exceeds the registration threshold, then clubs must register and account for VAT on any business
activity (e.g. a bar) or any supply made to members (e.g. the hire of tennis racquets) for a payment over and
above the annual membership fee.
For example, where the total annual taxable income from the provision of facilities for taking part in golf in a
member-owned or local authority golf course exceeds or is likely to exceed €37,500, it will become liable for VAT
at the 13.5% rate. This includes driving ranges and par 3 golf but not pitch and putt.
Are you satisfied that VAT is being properly accounted for and that input credit is being taken only on
expenditure incurred directly in connection with the taxable activities?
Where input credit has to be apportioned, for example for the bar portion of a clubhouse, are you satisfied that
this has been done correctly?
3 International trade
Do you buy or sell goods or services from/to customers outside of Ireland?
If no, please go to 4
3.1 Exports to outside the European Union
Do you sell goods to customers outside the EU?
If no, then please go to 3.2
Copies of sales invoices are not sufficient evidence for all exports on which zero-rating has been claimed.
Revenue requires that customs export documents (SAD forms) and proof of physical exportation be retained. In
the case of mail-order sales, certificates of posting, issued by the Post Office, are accepted in lieu of SAD
documents.
Are copies of customs export SAD documents/postal certificates available to support zero rating?
Yes No
3.2 Exports and other EU member states
Do you sell goods to VAT registered customers in other EU member states?
If no, please go to 3.3
Where the zero-rate has been charged on the export of goods to a VAT registered entity in another EU member
state has the company:
• obtained the customer’s foreign VAT number and satisfied itself that the number quoted is valid
• or the customer’s bona fide are established?
• quoted this foreign VAT number on its invoice to the customer?
• satisfied itself that the goods have been transported from Ireland?
Has VAT been charged on all despatches of goods to customers in other EU member state where the VAT
number of the purchaser was not obtained (subject to distance selling rules – see 3.3 below)?
3.3 Exports “distance sales” (mail order sales)
Do you sell goods to EU customers who are not VAT registered (private individuals) outside of Ireland.
If no, please go to 3.4
If the company supplies and delivers goods to customers in other EU member states, who are not VAT
registered it may be obliged to register in the country of its customer (subject to local thresholds).
Have you considered whether the company should be VAT registered abroad?
Have you considered whether you are required to register for VAT in another EU member state for distance
selling?
If applicable, please attach details of the value of sales to unregistered (private) customers in each State by
reference to calendar years.
3.4 Triangulation
Special rules govern the VAT treatment of ‘triangular transactions’. This refers to goods which are subject to a
transaction involving three different entities in three different EU countries. It is a simplification measure to relieve
traders of having to register for VAT in certain foreign countries.
Do you act as the intermediary in a triangular transactions and are you availing of the simplification where
available to avoid VAT registration in either the EU member state of dispatch or arrival of the goods?
If you are an intermediary, are you including the following on your sales invoices:
• the customers’ foreign VAT registration number; and
• the endorsement to advise your customer that this is a triangular transaction and that the simplification
applies.
3.5 Imports from outside the European Union
Have you imported any goods from outside the EU?
If no, please go to 3.6
Proper documentation must be retained in order to support claims for VAT input credit.
Are original VAT invoices and customs import SAD documents and deferred payment sheets/TAN Account
(where applicable) retained?
3.6 Imports (acquisitions) from other EU member states
Have you imported or acquired any goods from other EU member states?
If no, please go to 3.7
Companies who import goods from other EU member states must account for VAT on them on a “reverse
charge” basis, i.e. the recipient must self impose a VAT charge at the relevant rate.
Has this “acquisition VAT” been accounted for on goods imported from other member states?
3.7 Exports relief – “Section 13A authorisation” (now Section 56 VAT Consolidation Act 2010)
If a company supplies goods and at least 75% of its total turnover is derived from exports of goods (intra EU or
outside EU), it may apply for approval from Revenue to obtain goods and services from Irish suppliers and
import goods without incurring a VAT charge. (See exception – 2.2)
Has the company availed of this relief?
If no, please go to 3.8.
Is the authorisation up to date? (they are usually only valid for a period of two years, generally expiring at the end
of October).
Do you still qualify by satisfying the 75% test?
(Penalties apply if you do not notify Revenue when you no longer qualify for the authorisation)
Yes No
3.8 Foreign VAT
Has foreign VAT has been incurred?
If no, please go to 3.9.
If yes, have steps been taken to identify it separately?
If reclaimable, have you recovered the VAT from the foreign Revenue Authority (by making a claim through the
Irish Revenue online “ROS” system for VAT incurred in other EU countries)? (Deadline 30 September following
the end of the calendar year)
3.9 Overseas VAT registration
If you make a supply of goods in another EU member state where the goods are either purchased in that State,
taken from stock the company maintains there, or are installed there by the company, you may be required to
register for VAT in that country.
Do you make supplies of goods in another EU member state?
If no, please go to 4
If yes, have you considered whether you should register for VAT in that member state?
Please attach details if you consider you have a liability to register for VAT overseas and have not already done
so.
4 VAT and property transactions
Introduction
The VAT treatment of property transactions can be complex; we recommend that you seek professional advice
before undertaking any property-related transactions. As you may be aware new VAT on property rules were
introduced on 1 July 2008.
Where the company was involved in property transactions before 1 July 2008 please answer questions from
section 4A and where the company was involved in property transactions from 1July 2008 please answer
questions from section 4B.
Has the company been involved in any property-related transactions during the examined period?
(Sales, short-term letting, long term letting, assignment or surrender of property, new lettings)
If no, please go to 5.1
4A Property transactions before 1 July 2008
The VAT treatment on the letting of property can vary depending on the lease term as follows:
• short-term leases (less than 10 years)
• long-term leases (10 years or more)
4A.1 Short term lease
Has the company granted any short-term leases of property?
If no, please go to 4A.2
In principle, short-term lettings are exempt from VAT but a landlord can elect to treat them as taxable. Such an
election would be made to preserve VAT previously claimed (avoid self supply) or enable VAT to be claimed on
related costs.
Has your company considered waiving VAT exemption and accounting for VAT to avoid having to bear the VAT
liability on deemed self supplies?
If the company has elected to waive the VAT exemption on short-term leases has the company accounted for
VAT (at the standard rate) on short-lease of all its properties. Are all short-term lettings taxed?
If the company has elected to waive the VAT exemption on short-term leases is the company ‘connected’ to the
tenant?
If so, does the tenant have full VAT recovery?
Where a short-term letting has been granted between two members of the same VAT group and either party
leaves the group or the group breaks up, has the landlord waived its exemption in respect of short-term lettings
at that stage so as to avoid a deemed self-supply and claw-back of the VAT claimed on acquisition
(development)?
Yes No
4A.2 Long term leases/property sales
Has the company granted any long-term leases of property?
If no, please go to 4A.3.
Has the company sold any property and if so has the company charged VAT on sales of the property?
Did the company charge VAT on the capitalised value of property leased under long-term leases?
“Economic value”
With effect from 25 March 2002, where a long-lease is being created, surrendered or assigned and where the
capitalised value of that lease is less than its economic value (defined below) then the transaction is regarded as
being exempt from VAT. There is no right to waive this exemption. Consequently, where the capitalised value is
less than the economic value, the person creating, surrendering or assigning the lease will lose their entitlement
to recover VAT incurred on the acquisition or development of their interest in the relevant property.
The “economic value” is defined as the amount on which VAT was incurred in respect of the acquisition and/or
development of the property.
Has the economic value test been considered in respect of long-term lettings?
Does the company claim VAT input credit on post letting expenses?
(The term post-letting expenses is used to describe certain expenses incurred by a landlord in respect of a
property he has let on a long lease, after the lease has been created)
Landlords are entitled to VAT recovery in respect of post letting expenditure. Is the company aware of this and
has it sought recovery of any such VAT incurred in the past?
A relief in Section 4A, VAT Act 1972, as amended, enabled a fully taxable lessee to account for the VAT arising
on the creation of a long lease on a reverse charge basis. Advance Revenue approval is required.
Was Section 4A relief availed of and did the company raise an appropriate invoice?
4A.3 Assignments
An assignment of an interest in property is valued in a similar manner to the creation of a long lease. In most
cases the assignee is accountable to Revenue for any VAT arising on a reverse charge basis.
Has the business acquired an interest in any property by way of assignment?
If no, Please go to 4A.4.
4A.4 Surrenders
The surrender of an interest in property is valued in a similar manner to the creation of a long lease. Surrender
includes abandonment, failure to exercise an option to extend the term, ejectment and forfeiture. In most cases
the landlord is accountable to the Revenue for any VAT arising on a reverse charge basis.
Has the business received back an interest property by way of surrender?
A matching deduction for the reverse charge VAT in respect of the surrender can be claimed, e.g. if the property
was to be used for a further taxable supply or a taxable purpose?
Are you satisfied that VAT has been accounted for correctly?
4A.5 Subsequent supplies of property (apart from surrenders)
Have you made a subsequent supply of property following surrender e.g. granted a new lease?
If no, please go to 4B.
If yes, are you satisfied that VAT has been accounted for correctly in respect of this supply? Particularly complex
rules apply to such transactions.
4A.6 Leases granted
Was the company granted any long leases in the period? If so please give further details.
4B Property transactions after 1 July 2008
Under the new rules property transactions can be broken down as follows:
• sales of properties:
− ‘new’ properties
− ‘old’ properties
• leasing of properties
− new leases
− transitional leases
Yes No
4B.1 Sale of ‘old’ property
Under the new rules the sale of an old property is VAT exempt. A property becomes ‘old’ 5 years
after ‘completion’ and is not 'significantly' developed in those years. A property is also ‘old’ for 2nd
and subsequent supplies if occupied for aggregate of 24 months or more. However, both parties
(vendor and purchaser) can jointly elect to charge VAT.
Did the company purchase/sell an ‘old’ property during the relevant period?
If no, please go to 4B.2.
If yes, was the transaction treated correctly for VAT purposes?
Please attach details of the VAT treatment.
4B.2 Sale of ‘new’ property
‘New’ properties are liable to VAT at 13.5%. A Property is ‘new’ once it has been developed or
redeveloped/transformed (made new). Partially completed buildings as well as developed land are always
liable to VAT at 13.5%.
Did the company purchase/sell a “new” property during the relevant period?
If no, please go to 4B.3.
If yes, was the transaction treated correctly for VAT purposes?
Please attach details of the VAT treatment.
4B.3 New leases
Under the new rules all leases created from 1 July 2008 are exempt from VAT. However, the landlord may ‘opt to
tax’ and charge VAT on rents at 21%. A landlord may not ‘opt to tax’ a letting or the option is cancelled where the
landlord and tenant are ‘connected’ unless the tenant has at least 90% VAT recovery.
Has the company granted or been granted a lease?
If no, please go to 4B.4.
If yes, was the transaction treated correctly for VAT purposes?
Please attach details of the VAT treatment.
4B.4 Transitional leases
Assignment/surrender of a lease originally created prior to 1 July 2008 is a supply of 'goods' where it occurs
within 20 years from the creation of the lease. Treatment depends on whether tenant had recovery or not
(taxable if recovery, exempt if no recovery). However both parties can jointly opt to tax - to avoid clawback of
VAT recovered on acquisition. If the parties opt, the assignment/surrender is VATable on the reverse charge
basis and the person making assignment/surrender must issue a document to the assignee/landlord.
Has the company, as either landlord or tenant, been involved in a surrender/assignment since 1 July 2008 of a
pre 1 July 2008 lease?
If no, please go to 4B.5.
If yes, was the transaction treated correctly for VAT purposes?
Please attach details of the VAT treatment.
4B.5 Capital Goods Scheme (CGS)
The new rules also introduced a CGS. The scheme provides for the annual adjustment of VAT deductibility in
respect of the acquisition, development or refurbishment costs of the ‘VAT life’ of a property. The VAT-life of
buildings is as follows:
• purchase of property: 20 intervals (almost 20 years); and
• refurbishment: 10 intervals.
Where a company has a capital good it should carry out an annual review
• VATable activity increases, owner may be entitled to a refund from Revenue; and
• VATable use decreases, owner may be required to make extra payments to Revenue.
In addition to the annual review the company is required by statute to hold a Capital Good Record for each
property and refurbishment. The capital good record should include the following:
• capital good details;
• VAT paid/reclaimed as input tax;
• VATable use per interval (and basis of calculation); and
• VAT adjustment per interval.
Where the company acquired/developed a property after 1 July 2008, does it hold a complete and up-to-date
Capital Good Record for each property/refurbishment?
If yes, please attach a copy of the capital good record
5 Accounting for VAT on services received from abroad
Yes No
5.1 General
With effect from 1 January 2010 companies must account for Irish VAT on a reverse charge basis on virtually all
services received from abroad. This also includes services previously known as “Fourth Schedule services” e.g.
most professional and consultancy type services
Companies who purchase taxable services from abroad must account for VAT on them on a “reverse charge”
basis, i.e. the recipient must self impose a VAT charge.
Has the company purchased any services from abroad?
If no, Please go to 6.1.
Are you satisfied that the receipt of services from aboard is being properly accounted for by your company?
5.2 Any services supplied to customers outside Ireland?
If yes, is Irish VAT charged?
If no VAT charged, please explain why.
6 Financial services
Certain financial services are exempt from VAT; if you are unsure what these services are, please let us know.
Generally input credit is not allowable in respect of such supplies. Where the services are supplied to customers
outside the European Union, however, input credit may be allowable.
Has the company supplied any financial services?
6.1 General
Have you provided any financial services to non-EU customers?
If no, please go to 6.2.
Have you claimed any input credit in relation to these supplies?
Other financial services are liable to VAT, e.g. lease rentals and fee income.
Have you accounted for VAT on any such income received?
6.2 Apportionment of credit
If you make both taxable supplies e.g. leasing of goods, and exempt supplies e.g. granting of credit or provision
or insurance, then you will be entitled to partial VAT recovery in respect of dual use costs. The deductible
proportion must reflect the extent to which such costs are used in generating taxable/qualifying activities and has
due regard to the range of that persons total supplies and activities.
Do you use a partial recovery method that includes the interest element of the credit or the full repayment
(interest plus capital)?
Do you carry out an annual review of the deductible proportion?
Are you satisfied that your method produces the optimum result?
Is the method in accordance with the latest legislation/statement of practice issued by Revenue?
6.3 Lease contracts
Have you issued any lease contracts?
If no, Please go to 6.4.
Do you have valid VAT invoices for all assets purchased and subsequently leased to third parties?
Have you issued the correct invoices/credit note in respect of disposals at the end of the lease?
Have you accounted for VAT on any advance rentals / deposits received?
Have you issued invoices to the lessees?
6.4 Hire purchase
For VAT purposes hire purchase contracts can be either an exempt supply of credit or a taxable supply of a
lease, depending on the structure of the contract. Are you satisfied you have applied the correct treatment to any
such contracts?
Yes No
6.5 Services received from abroad/Intra community acquisitions
Are you satisfied that your system is tracking services received from abroad and intra-community acquisitions?
7 VAT compliance
7.1 Preparation and submissions of VAT returns
Are VAT returns submitted and payment made to the Collector General on or before 19th (23rd if using ROS) of
the month following the period to which the return refers?
Are all relevant figures included on VAT returns?
(This includes intra-community supplies, acquisition and services received from abroad)
An additional return is required once annually showing the net value of sales, purchases, imports and intra EU
acquisition at each VAT rate.
Is the return (Annual Return of Trading Details) completed and submitted to the Revenue?
If you pay by direct debit, did your payments for the year amount to at least 80% of your actual liability in order to
avoid interest?
7.2 Underlying records
Is proper documentation retained in order to support claims for input credit?
Do the records comply with the VAT regulations?
The following should be noted;
• purchases records should distinguish between goods for resale and others;
• the records should reflect the different rates of VAT;
• the records should provide an “audit trail” to original documentation for purchases and to copy sales invoices;
and
• the records must be retained for a period of 6 years, unless specified approval has been received for a lesser
requirement.
In particular, original invoices must be available – copy invoices or microfilmed invoices are not sufficient in the
case of purchase documents.
Do you operate an EDI system?
Does the EDI system meet the Revenue Commissioners requirement for persons who issue invoices
electronically?
7.3 VIES returns
Does the business despatch goods or supply services to VAT registered customers in other EU member states?
If yes, does the business complete and file VIES returns to the VIMA Office of the Revenue Commissioners?
(VIES for services must be filed since 1 January 2010.)
Have all VIES returns been submitted within one month of the last day of return period?
7.4 Intrastat returns
If you supply goods to VAT registered customers in other EU countries or purchase goods from other EU
Countries, you must enter the details at boxes E1 or E2 as appropriate.
Do you complete these boxes?
If the value of a company’s supplies of goods to other EU member state exceeds €635,000 or acquisitions of
goods from other EU member state exceed €191,000 annually, an intrastat dispatches/arrivals return detailing
such supplies must be completed and submitted before the 10th working day after each month end.
Does this apply?
If no, please go to 7.5.
If yes, have all intrastat returns been submitted within due dates?
8 VAT audits
Yes No
Health warning: Revenue audits are increasingly concentrating on VAT and as a result allocating much of the
resources used at audits to the review of VAT. This is on the basis that VAT audits often produce the highest tax
yield and the most issues and discrepancies. In the context it is important to take steps to ensure the accuracy of
VAT declarations and clarify any uncertainties in VAT treatment in advance of such audits. Client directors will
wish to comply with taxation law.
Outstanding queries
Has the business had a Revenue VAT audit in the past three years?
If yes, what issues, if any, arose and are there any outstanding queries from that audit?
Have any rulings, directions or any concessions issues which affect the preparation of the VAT returns?
Have you made a formal “expression of doubt” to the Inspector of Taxes in relation to the VAT treatment any
issue or transactions?
If so, have you received a formal acknowledgement of the letter of “expression of doubt” from the tax authorities?
Are you familiar with the Revenue code of practice in relation to Audits?
9 Additional comments
9 Additional comments
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