Accounting for VAT on moneys received

Changing to and from the moneys received basis

Invoice or sales basis to the moneys received basis

Revenue gives you consent 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 Revenue authorise you to do so.

Moneys received basis to an invoice or sales basis

A person, authorised to account for VAT on the moneys received basis, may have that authorisation withdrawn. Similarly, a person may cease to be an accountable person for VAT. An adjustment is then 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. It relates only to 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 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.

The tax included is due for the period in which the cessation of the monies received basis occurs.

There is no adjustment of liability where the cessation occurs due to the death of the accountable person.

Next: VAT rates on the moneys received basis