Accounting for VAT on moneys received

What sums are included in the moneys received basis?

Moneys received by a Value-Added Tax (VAT)-registered supplier include any sums:

  • lodged or credited to the supplier’s account in a bank, building society or other financial concern
  • received by another person, such as a solicitor, on the supplier’s behalf
  • deducted as Professional Services Withholding Tax by an accountable person
  • deducted as Relevant Contract Tax by a principal contractor or subcontractor
  • paid to Revenue by a third party to the supplier’s account in accordance with Revenue’s power of attachment.

A VAT-registered person is also deemed to have received money if liability in respect of a business transaction is settled by setting off against it a credit due, in respect of some other transaction. The date of the offset is deemed to be the date of receipt.

Care must be taken when money is received through an agent that any amount withheld by the agent to cover, for example, his or her fees, expenses and so on, is included as moneys received.

The date of the offset is deemed to be the date of receipt.

Professional Services Withholding Tax (PSWT)

PSWT withheld from payments for professional services is deemed, for VAT purposes, to be part of the consideration received by the supplier.

Relevant Contract Tax (RCT)

VAT on construction services supplied by a subcontractor to a principal should be accounted for on a reverse charge basis by the principal contractor.

This means:

  • the subcontractor will be paid only on a VAT-exclusive basis
  • the principal contractor should account for VAT on the full consideration charged by the subcontractor, including RCT withheld
  • RCT should be assessed on the VAT-exclusive consideration.

The reverse charge also applies in respect of construction services provided between two connected persons.

Please also refer to further guidance on State procurement if the transaction involves State bodies.

Next: Moneys received basis eligibility and cancellation