Accounting for VAT on moneys received

Who may opt for the moneys received basis?

You may apply to account for Value-Added Tax (VAT) in this way if you are a VAT registered person: 

  • whose turnover does not exceed, or is not likely to exceed, €2,000,000 in any continuous period of 12 months
  • or
  • whose supplies (at least 90%), are made to customers not entitled to claim a full deduction of VAT or who are unregistered for VAT.

The second condition applies to sales by retailers, public houses, restaurants and any similar business selling mostly to private individuals.

What is the moneys received basis?

Under the normal basis for accounting, a trader is liable to account for VAT when:

  • the trader makes a supply
  • or
  • when the trader issues an invoice to a customer.

Under the moneys received basis of accounting a trader is liable to account for VAT when they receive a payment 

If you are using the moneys received basis for VAT, the normal invoicing requirements still apply.

When can you not use the moneys received basis?

You cannot use the moneys received basis in respect of the following transactions:

  • transactions with a connected person
  • construction services supplied by a sub-contractor to a principal contractor
  • VAT on property transactions consisting of the creation of long leases prior to 01/07/2008
  • intra community acquisitions of goods and services
  • or
  • the importation of goods into the state.

Next: How do you apply for the moneys received basis?