Claiming VAT Back on Purchases Bills: what could go wrong?

VAT deductions might seem simple but there is a lot that can go wrong. I have outlined below what you need to do to fix an oversight!

What goes wrong?

Failure to register for Irish VAT in the First Place

a business may exceed the Irish VAT registration threshold  without realising it. Meaning you have to go back on pay vat on the sales, just as if you had charged vat in the first place

Incorrect VAT rates are applied:

Ensure that they are charging the appropriate VAT rate(s) on what you are selling. Different goods or services frequently have different rates.

Failure to account for VAT on the reverse charge basis:

Taxpayers acquiring taxable goods or services in Ireland from abroad within the EU generally must ensure that VAT is being accounted for on the reverse charge basis. Ask your accountant about this if you are importing.


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Incorrectly recovering VAT on non-deductible expenditure:

VAT is typically not recoverable on expenditure incurred on food, drink, accommodation, entertainment, petrol and certain other motor related costs. If you do claim it, be prepared to paying it back.

Failure to make an adjustment for unpaid purchases:

If you haven’t paid a particular bill within 6 months of receiving it, you have to pay back the vat on the next vat return.


Regardless of the nature and extent of an error, timing is absolutely key when it comes to making a correction. There are obvious advantages associated with taking prompt action, normally in the form of lower interest and penalties.

Self-correction without penalty

Fix it as soon as you find it and move on.

While there are a number of conditions attached to self-correction without penalty, taxpayers can generally avail of it provided the net underpayment of VAT for the period being corrected is less than €6,000. There are other conditions, too, but this is the main one.

It is likely that most businesses will discover a VAT error at some point in their life, although the significance of the error will vary considerably between taxpayers. Timely action, full disclosure and co-operation with Revenue is always advisable when regularising tax affairs.

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