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
  • or
  • 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 deemed to have received money if liability in respect of a business transaction is resolved. This may include the offsetting of a credit due in respect of some other transaction. In this instance, the date of the offset is the date of receipt.

When money is received through an agent, a record should be kept of any amount withheld by the agent.  Agent’s fees, expenses and so on, are included as moneys received.

Professional Services Withholding Tax (PSWT)

PSWT withheld from payments for professional services is regarded, for VAT purposes, as being part of the consideration received by the supplier.

Relevant Contract Tax (RCT)

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

This means:

  • the principal contractor pays the subcontractor on a VAT-exclusive basis
  • the principal contractor  accounts for VAT on the full consideration charged by the subcontractor, including RCT withheld
  • and
  • RCT is 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