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GAZETTE
NOVEMBER 1992
in the Revenue Statement of Practice
and the Explanatory Note attached
to Statutory Instrument No. 93 of
1992. The Statutory Instrument does
not clearly state the intention as set
out in the Statement of Practice and
the Explanatory Note. The Revenue
Commissioners have confirmed that
a revised Statutory Instrument will
be issued later in the year.
Those who have been on the cash
receipts basis for more than 6 years
and are going to lose it from 1
January, 1993 should ascertain the
level of their debtors at 30 April,
1986; 30 June, 1986; 31 August,
1986; 31 October, 1986; and 31
December, 1986 and compare them
with the projected balances 6 years
on. A study of the comparative
figures will give a basis for deciding
which of the foregoing is the most
appropriate date for ceasing on the
cash basis. The Revenue
Commissioners have confirmed that
the position as outlined in Statement
of Practice VAT/2/92 can be relied
upon until the new S.I. is issued.
Some will have debtor balances
lower than the corresponding 1986
figures because they currently factor
their debts. They should consider
temporarily suspending the factoring
arrangement to allow the debtors
reach the 1986 level.
I have heard it suggested that those
affected should get their debtors as
low as possible at 31 December, 1992
to reduce the debtors adjustment.
Doing so appears to solve the
problem but does not. If the debtors
are reduced by getting the cash in
before 31 December, 1992, VAT
becomes payable on the receipt of
the cash. If debtors are reduced by a
delay in invoicing, VAT on the
invoices becomes due when on the
invoice basis in 1993.
Other Changes
There are three other changes
proposed in Section 177 of the
Finance Act, 1992 as regards the
cash receipts basis.
(i)
Prior to the passing of the Act
those on the cash receipts basis
accounted for VAT at the rate
in force at the time of receipt
of the cash. This meant that
. those on a cash receipts basis
gained when rates were reduced
and lost when rates were
increased. Since the passing of
the Act those on the cash
receipts basis account for VAT
at a rate appropriate at the
time of supply.
(ii) Prior to the passing of the Act
if a person changed from the
invoice basis to the cash
receipts basis a double liability
arose on the debts outstanding
on changeover. Firstly, while on
the invoice basis he was
chargeable to VAT when the
invoice was issued and
secondly, after the changeover,
when the cash was received
from the debtor. Since the
passing of the Act this no
longer applies.
(iii) Prior to the passing of the Act
the Revenue interpretation was
that a person who opted for
the cash receipts basis was
liable to VAT on all cash
receipts from supplies, even
supplies made before he was
registered. For example, vets
who opted for the cash receipts
basis on registration on 1
January, 1992 were liable on
receipts for supplies made
before he was registered. (This
interpretation is open to
question in view of the
judgment of the European
Court in the
Massalai
case
(Case 111/75)). Since the
passing of the Act this anomaly
no longer exists.
What to do Now
•
Those on the cash receipts
basis for more than 6 years
should now review their debtors
of 6 years ago to decide on the
best date for changeover to the
invoice basis.
•
Those who will lose the cash
basis should review their cash
requirements to meet the
debtors adjustment and the
cash flow loss for 1993. It
would be prudent to discuss
this with the bank manager
before it arises.
•
References:
EC 6th Directive Article 10 - derogation
A Guide to the Sixth VAT Directive
IBFD Publications - page 391
VATA 1972, section 14
S.I. 177 of 1972
VAT Regulations 1979 No. 7
S.I. 298 of 1986
S.i: 93 of 1992
Finance Act 1992 Section 177
Statement of Practice (VAT/2/92)
Value Added Tax - Institute of Thxation -
Chapter 14
Value Added Thx Guide - Chapter 9.
SYS Committee
1992-1993
At the Annual General Meeting of
the Society of Younger Solicitors
(SYS), the following officers were
elected:-
Chairman: Owen O'Sullivan
Vice Chairman: Paul White
Treasurer: Paul Marren
Secretary: Maureen Walsh
Public Relations Officer: Gavin
Buckley
The following were elected as
committee members:- James
McCourt, Mary Hayes, Jennifer
Blunden, Walter Beatty, Robert
Hennessy.
•
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