VAT Compliance 2019 Filings: Types of Returns and Other Considerations - Deloitte
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86 VAT Compliance 2019 Filings: Types of Returns and Other Considerations
Conor Walsh
Senior Tax Manager, Deloitte
VAT Compliance 2019 Filings:
Types of Returns and Other
Considerations
Introduction VAT Returns
This article provides an overview of the Every VAT-registered person is obliged to
various types of returns associated with VAT file a VAT return for each taxable period.
compliance. It outlines who is obliged to file the Generally, VAT returns are filed on a bimonthly
returns, how often the returns need to be filed, basis, but other filing periodicities may be
the statutory due dates for filing and payment permitted; in certain cases returns may be filed
(where applicable), and details of what needs on a monthly, triannual, biannual or annual
to be included in the returns. The article also basis. Unlike in many other jurisdictions, a
identifies some areas that should be considered quarterly periodicity is not available for VAT
as part of the VAT compliance process. returns in Ireland.2019 • Number 02 87
In practice, such returns must be filed Annual Return of Trading Details
electronically on or before the 23rd day of the
All VAT-registered traders should submit an
month following the end of a taxable period.
Annual Return of Trading Details (ARTD). As
If the return gives rise to a net VAT payable
its name suggests, the return is filed once per
position, that liability should be discharged by
year, with Revenue stipulating that it should
the same deadline. For example, the January/
be filed on or before the 23rd day of the
February bimonthly VAT return must be filed
month following a trader’s accounting year-
on or before 23 March. If the return gives rise to
end. VAT-registered persons with a year-end
a liability, it should be discharged on or before
of 31 December should file their ARTD on or
this date too.
before 23 January each year.
The VAT return is completed as follows:
The ARTD is a statistical return that contains
the net values (i.e. VAT-exclusive amounts)
Box T1: Output VAT of a year’s trading details. It is intended to
Box T2: Input VAT be a detailed summary of all supplies that
a business made and received during its
Box T3/T4: et VAT payable/repayable
N
accounting year.
position
Box E1: ecords the net (i.e. VAT-
R The return is essentially an audit tool to
exclusive) amount of goods assist Revenue in verifying the accuracy
dispatched to other EU countries of a taxpayer’s VAT returns. Revenue has
Box E2: ecords the net (i.e.
R emphasised this point in recent guidance by
VAT-exclusive) amount of stating that when a nil ARTD is filled for a
goods acquired from other period in which values have been declared in
EU countries the VAT returns covering the accounting year, it
Box ES1: ecords the net (i.e.
R will be rejected.
VAT-exclusive) amount of
services supplied to other EU There are four sections/questions to be
countries completed on the ARTD:
Box ES2: ecords the net (i.e.
R
VAT-exclusive) amount of Question 1: “ Supplies of Goods & Services
services received from other Net of VAT”
EU countries Question 2: “ Acquisitions from EU Countries
Net of VAT & VAT free imported
In recent times, two new features were added parcels”
to the VAT return filing process: there is now
Question 3: “ Stock for Resale (purchases,
an option to provide additional information to
Intra-EU acquisitions & imports)
Revenue regarding any unusual expenditure
Net of VAT”
incurred during the period; and a “confirmation
screen” has been added, with the intention of Question 4: “ Other Deductible Goods &
reducing the potential for submission of returns Services (purchases, Intra-EU
containing errors or omissions. acquisitions & imports) Net
of VAT”
I maintain my long-held view that Ireland’s
VAT reporting process will be overhauled in Failure to submit an ARTD may result in
the next few years. Revenue’s seeking to withhold tax refunds for
any tax type. Revenue may also refuse to issue
a tax clearance certificate.88 VAT Compliance 2019 Filings: Types of Returns and Other Considerations
VAT Information Exchange Revenue and VIES, Intrastat and Mutual
Assistance (VIMA) monitor the figures declared
System Returns
in boxes E1 and ES1 of traders’ periodic VAT
Where a VAT-registered person supplies goods returns to establish whether they should be
or services to business customers registered registered for VIES. Despite this, the onus rests
for VAT in another EU jurisdiction, that person on the taxpayer to determine whether they
is required to complete a statistical return should be registered.
known as a VAT Information Exchange System
(VIES) return. This is Ireland’s version of the
It is common for tax authorities to collaborate
EC Sales List/ESL.
on a cross-border basis in an effort to prevent,
deter and detect fraudulent behaviour.
The return does not extend to the receipt
of supplies of goods or services by a VAT-
registered person. There is no threshold for the Intrastat Returns
requirement to register for VIES, but there are Where a business dispatches goods from
some limited exceptions to this. Ireland to another EU country, or brings
goods into Ireland from another EU
VIES returns are required to be filed on a country, there is a requirement to file an
monthly or quarterly basis. Monthly filing is Intrastat return if certain thresholds are
required only where the trader’s reportable breached (there are some exceptions to this
supplies of goods are relatively significant. requirement):
For traders that have only reportable
supplies of services, returns can be filed • Intrastat arrivals returns must be filed where
quarterly irrespective of the value of the the value of arrivals of goods into Ireland
supplies made. from other EU Member States exceeds
€500,000 annually.
In practice, such returns must be filed
• Intrastat dispatches returns must be filed
electronically on or before the 23rd day of
where the value of dispatches of goods
the month following the end of a monthly/
to other EU countries exceeds €635,000
quarterly period. For example, the quarter
annually.
1 VIES return is required to be filed on or
before 23 April.
Traders who exceed just the dispatches
threshold only have to file a return recording
VIES returns normally contain the following
their dispatches. Similarly, traders who exceed
information:
just the arrivals threshold only have to file a
return recording their arrivals.
• the trader’s VAT number,
• the recipient’s foreign VAT number, Intrastat returns are filed on a monthly basis.
• the total value of supplies made to each They should be filed on or before the 23rd
customer, day of the month following the end of the
monthly period. For example, the January
• the indicator “S” in the flag column where
Intrastat returns should be filed on or before
the supply relates to services and
23 February.
• the indicator “T” in the flag column where
goods were the subject of the triangulation Intrastat arrivals returns normally contain the
procedure. following information at a minimum:2019 • Number 02 89
• country of consignment, to VAT in the country where the customer is
• country of origin, based. Ordinarily, absent any specific scheme,
a business that makes such supplies would be
• nature of transaction, required to register for VAT in every country
• mode of transport, where it has customers. The Mini One-Stop
Shop (MOSS) regime was created to relieve the
• commodity code,
administrative burden associated with doing so.
• number of supplementary units (depending
on the applicable commodity code), There are two MOSS schemes; the non-Union
• net mass and scheme (for suppliers established outside the EU)
and the Union scheme (for suppliers established
• invoice value (expressed in euro).
in the EU). For businesses established in Ireland,
the Union scheme would be applicable.
Intrastat dispatches returns normally contain
the following information at a minimum:
With the exception of the registration criteria
that determine which scheme a business
• country of destination,
can use, the two are very similar. The MOSS
• nature of transaction, regime allows businesses to file and pay the
• mode of transport, VAT due in respect of supplies of the relevant
services to all EU jurisdictions in a single return.
• commodity code,
Unsurprisingly, most businesses that make such
• number of supplementary units (depending supplies have opted to register for this regime.
on the applicable commodity code),
• net mass and MOSS returns are filed on a quarterly basis.
They must be filed electronically on or before
• invoice value (expressed in euro).
the 20th day of the month following the end of
a calendar quarter. The associated VAT liabilities
More detailed Intrastat returns are required
(if any) should be discharged by the same
when the value of the goods being moved is
deadline. For example, the quarter 1 MOSS
very significant.
return must be filed on or before 20 April. If the
return gives rise to VAT liabilities, they should
Revenue and VIMA monitor the figures declared
be discharged on or before this date too.
in boxes E1 and E2 of traders’ periodic VAT
returns to establish whether they should
In the event of a “no-deal” Brexit, businesses
be registered for Intrastat arrivals and/or
that are registered for either the Union or the
dispatches. Despite this, as with VIES returns,
non-Union MOSS scheme in the UK can expect
the onus rests on the taxpayer to determine
to be automatically de-registered immediately.
whether they should be registered. The value of
As part of Brexit preparations, businesses that
goods acquired from and dispatched to other
are registered for the non-Union scheme in
EU Member States should therefore be tracked
the UK have been “moving early”, and Ireland
and reviewed on an ongoing basis.
seems to be the destination of choice in most
cases. Businesses registered for the Union
Mini One-Stop Shop Returns scheme in the UK (i.e. those established there)
Since 1 January 2015, supplies of cannot move their MOSS registration before
telecommunications, broadcasting and Brexit, in accordance with EU law. After Brexit,
electronically supplied services made by if a deal is not agreed, UK businesses will
EU suppliers to private individuals and be able to register for the non-Union MOSS
non-business customers have been subject scheme in Ireland.90 VAT Compliance 2019 Filings: Types of Returns and Other Considerations
Businesses established in Ireland that currently • quantity and nature of the goods/services
declare and pay the UK VAT due on supplies supplied,
of telecommunications, broadcasting and • description of the goods/services supplied and
electronically supplied services under the
Union MOSS scheme would likely be required • if the supply is subject to the reverse-charge
to register for UK VAT in the event of a no- mechanism, a reference to the “reverse
deal Brexit. charge” and the customer’s VAT number.
Reverse-charge VAT
Other Points
It is important to declare VAT due on the
Having provided an overview of the various reverse-charge basis arising from the
types of return associated with VAT acquisition of goods and services from abroad,
compliance, I outline some areas below that as well as on certain domestic transactions.
should be considered as part of the overall VAT Where applicable, the net value of those
compliance process. transactions should also be recorded in one of
the statistical boxes on the VAT return.
Preparation of returns
Firstly, still in the area of returns, return details This is an area that Revenue will typically review
can be submitted online “live” to the Revenue as part of a VAT audit.
Online Service (ROS).
Adjustment of deductible VAT
With the exception of ARTDs, draft returns can As part of the periodic VAT return process,
also be prepared “offline” using the ROS offline VAT-registered persons should conduct a
application. Once completed, these forms review of their aged creditors.
can be reviewed and authorised before being
uploaded to ROS. This serves as an internal If a VAT-registered trader deducts VAT in a VAT
control procedure as it reduces the risks return but has not, within six months of the end
associated with filing incorrect returns “live”. of that taxable period, paid the supplier in full
for the goods or services, then the amount of
Invoicing requirements VAT originally claimed as a deduction should
Although there has been a body of recent be adjusted in the current VAT return. There are
European case law that has arguably reduced limited exceptions to this.
the obligation to be in possession of valid
VAT invoices to support input deduction, Where a restriction has been applied previously
it is advisable to ensure that the invoicing and a payment has since been made to a
requirements contained in the Irish VAT supplier, a re-adjustment can be made to
regulations are adhered to. reclaim the VAT incurred.
The key requirements of a valid VAT invoice are: In practice, when raising “aspect queries” or
“verification checks”, Revenue will typically
• supplier’s name, address and VAT number, request details of aged creditors to ensure that
• customer’s name and address, such adjustments are being made.
• date of invoice,
Tax coding
• sequential invoice number, Although some businesses assign tax coding
• VAT rate(s) applying to the supply/supplies, to transactions in enterprise resource
planning (ERP) systems, there are still a
• amount of VAT stated in euro,
significant number that do not. Implementing2019 • Number 02 91
tax coding (for both accounts receivable most are yet to consider the application of
and accounts payable) typically reduces robotics process automation (RPA) to their
the time spent on the preparation of VAT VAT reporting processes, which can bring
returns and the need for manual intervention. significant benefits to repetitive tasks. For
Implementing a tax determination engine can example, a robot (a piece of software) can be
also be very beneficial, especially in more configured to run reports from ERP systems
complex companies. and then save those reports. In businesses
where there are large or numerous reports to
VAT compliance software run, the prospect of automating such tasks
Where tax codes are assigned to transactions, is extremely appealing, especially given that
businesses can explore using VAT return the software can be programmed to run off-
preparation software. Such software is typically peak, when systems often lie idle. You can, of
designed to “map” a business’s tax coding logic course, design the robot to do far more, such
and then generate draft VAT returns across as preparing VAT returns, filing returns and
different jurisdictions. sending automated emails to those responsible
for preparing returns.
Reporting functionality
The standard “off the shelf” tax reporting Conclusion
features in ERP systems are often suboptimal As outlined above, every VAT-registered
but, with a level of investment, can be person is obliged to file periodic VAT returns
adapted to provide long-term benefits and should also file ARTDs. Depending
(such as a significant reduction in the time on the nature of the transactions entered
and effort required to prepare VAT returns into, they may also be required to file VIES
while mitigating or even eliminating instances returns and/or Intrastat returns. Typically,
of human error). Investing in improving the such obligations are placed on businesses
quality of data that can be extracted from ERP that are engaged in international trade. In
systems normally provides instant results. addition, businesses that make supplies
of telecommunications, broadcasting and
Monitoring statutory deadlines electronically supplied services to private
Many businesses continue to monitor statutory individuals and non-business customers in
compliance deadlines in an Excel spreadsheet other EU countries will normally register for
saved locally or on a shared drive. This can the MOSS scheme and file quarterly MOSS
work for some businesses, but moving to a returns, rather than registering for VAT in each
cloud-based tracker gives greater visibility to jurisdiction in which their customers are based.
staff and saves the time required to update
other staff separately. The information can also To minimise the amount of time spent on meeting
be shared with or viewed by a third party (such compliance obligations and the level of errors
as an adviser where a compliance outsourcing arising from human intervention, the use of
or co-sourcing relationship exists). technological advancements could be considered
as part of the tax compliance process.
Robotics process automation
For most businesses, the amount of time
being spent on tax compliance has increased Read more on VAT and VAT on
considerably over the past decade. However, Property, 2017You can also read
