Accounting for VAT on moneys received

Changing to and from the moneys received basis

Invoice or sales basis to the moneys received basis

Where Revenue gives you permission to change from the invoice basis to the moneys received basis, you are liable for Value-Added Tax (VAT) on moneys received from the approved date of the change.

Moneys received do not include any payments on which VAT has already been accounted for in respect of goods and services supplied.

You may not change from the invoice basis to the moneys received basis unless we authorise you to do so.

Moneys received basis to an invoice or sales basis

Where a person, authorised to account for VAT on the moneys received basis ceases to be authorised or ceases to be an accountable person, an adjustment is made in the period of cessation, to account for the VAT payable on outstanding debtors at that date.

The adjustment is based on the amount due to the accountable person by outstanding debtors in respect of taxable supplies at the date of cessation. The rate(s) of VAT applying to the amounts outstanding are calculated in accordance with the following formula:

(A x B) / C

A - the total amount due to the person at the end of the authorised period for goods and services supplied during the authorised period (outstanding debtors).

B - the taxable amount in respect of taxable supplies at each rate of tax in the 12 months prior to the date of cessation or in the authorised period, whichever is shorter.

C - the taxable amount in respect of total taxable supplies in the 12 months prior to the date of cessation or in the authorised period, whichever is shorter.

You may agree with your local Revenue district on another basis of apportionment between the various rates of tax.

The amount so apportioned at each rate is a tax-inclusive amount and the tax included is to be treated as tax due for the period in which the cessation of the monies received basis occurs.

No adjustment of liability is made where the cessation occurs due to the death of the accountable person.

Next: VAT rates on the moneys received basis