Can I Reclaim My VAT When a Customer Fails to Pay Me? FINANCE
Byline: Colm Rapple
Q I am a sole trader and have issued two bills to a client, one for [euro]3,000 and another for [euro]500. I have paid the VAT on both these amounts but the client has no intention of paying me. He has the money but is using the recession as an excuse not to pay me. Can I reclaim the VAT in this year's returns?
A Yes, the Revenue does allow you to reclaim the VAT paid in respect of bad debts that have been written off in your accounts, provided you account for your VAT on the basis of invoices, keep adequate records and have made every reasonable attempt to get paid.
Writing off the debt in your accounts doesn't mean you can't still pursue your client for payment, and he doesn't have to know you have written off the debt or reclaimed the VAT. He still owes the full amount, including VAT, and if you get paid, you'll then have to account to the Revenue for the VAT.
Q I have [euro]13,000 in an approved retirement fund since August 2008. I would now like to withdraw it. I am over 65 on a public service pension of [euro]16,000. My husband is on illness benefit. What are the tax implications of withdrawing this money? Would I be better spreading the withdrawal over a number of years?
A Assuming your husband is on an invalidity pension of [euro]193.50 a week, your joint income this year will be about [euro]26,000. If your husband is over 65 and on a higher pension, your joint income is unlikely to be more than [euro]29,000. If that is the case, then you are not liable for income tax.
This year, you could have a joint income of [euro]36,000 and still be exempt, but go above that and you would be in the tax net and liable for tax at 40% on income marginally above that level.
In order to avoid tax, you need to keep your annual income this year, including any withdrawal from the ARF, below [euro]36,000. So do the sums.
Assuming your income is close to what I have outlined above, you may need to spread the withdrawal over three years to totally avoid tax.
Q I joined the superannuation scheme on becoming a postprimary school teacher in 1979 and have been contributing to an AVC scheme since 1996. What is your advice on this system of saving in the current climate?
A Given your length of service up to this and assuming you have a few years to go to retirement, you'd be entitled to very close to a full pension even without additional voluntary contributions. …