Q. My company designs websites. If my customer is a business in the Republic of Ireland can I apply zero rate VAT to the sales invoice? Do I need their VAT number before I can do this? Is the situation different if my customer is a private individual?
A. Website design is a service, so the VAT treatment depends on whether your customer is a business or not. You should retain some evidence to prove whether your customer is in business, but you don’t need to hold its VAT number if your customer is not VAT registered.
Where your Irish customer is a business, and will use the service you provide for business purposes, the service you are providing is outside the scope of VAT. Your customer must apply the local Irish VAT to what it buys under the reverse charge rules. ‘Outside the scope of VAT’ means you do not apply VAT to your sale. If your business is VAT registered you will need to ask for its VAT number to report the sale on your EC sales list form. Only sales to VAT registered businesses are reported on that form.
If your Irish customer does not operate as a business, you must apply VAT at UK rates to your invoice, just as if your customer was located in the UK.
A. If you continue to live in the property after you have given it to your son, the gift will not be effective for inheritance tax (IHT), so no IHT will be saved. For IHT purposes the property will be treated as belonging to you until you stop using it, so it will form part of your estate on your death and be subject to IHT. There may be a reduction in the IHT due if your son also lives in the property and pays his share of the running costs.
If you son does not live in the property there may also be capital gains tax charges when he comes to sell the property. We need to discuss this plan in detail with both of you before the gift goes ahead.
Q. I run a landscape design business through a Limited Company employing a dozen staff. The business is registered as a subcontractor under the construction industry scheme (CIS), and receives payments from the main contractors after deduction of tax. I’m worried that under RTI we won’t be able to off-set the CIS deductions against the PAYE deducted from our payroll, so we will be out of pocket. Is this true?
A. If you trade as a Limited Company, under RTI the CIS tax retained by contractors can be deducted from the PAYE you deduct from your payroll. However, you will have to show how much CIS tax has been deducted on your Employer Payment Summary (EPS) each month. The EPS must be submitted by the 19th of the month following the end of the tax month for which the PAYE was deducted.