There were several VAT measures proposed in Finance Act 2021 outlined below which have now taken effect.
Previously, where a non-refundable deposit was received from a customer and the service relating to the deposit was cancelled, the recipient of that deposit could reclaim the VAT which it previously accounted for on receipt of the deposit. This was on the basis that the receipt of the deposit was not considered to be VATable as no supply of service actually took place.
Following an EU Court of Justice ruling which ruled that cancellation fees are taxable as they constitute a payment for either a service or a right to access a service, the legislation has been amended so that Value-Added Tax (VAT) is chargeable on the pre-payment and you must pay the VAT to Revenue in your VAT return.
The Finance Bill introduced some changes to VAT groups. When applying to enter into a VAT group, at least one member of the group must now be an accountable person (required to register and account for VAT). Revenue also will have the power to backdate a VAT group cancellation.
The VAT group remitter must also now notify Revenue where there has been a significant change in the financial, economic or organisational links of the members of the VAT group, where an entity in a VAT group ceases to be established in the State or where a member of the VAT group ceases to be an accountable person. A penalty will apply for each taxable period in which they were not notified of €4,000.
If you require assistance with any VAT or other tax requirements, please contact a member of the tax team.