The 23% standard rate of VAT is one of the highest in the European Union and our low rate of corporation tax of 12.5% means that most Revenue audits tend to focus on fiduciary taxes such as VAT. Retailers involved in any volume of transactions can incur substantial liabilities when VAT errors are made.
Retailers are perhaps more likely to be audited by Revenue for several reasons:
- a substantial amount of the total Revenue ‘VAT-take’ is charged and collected by retailers each year and much of this comes from the huge number of small and medium sized outlets based throughout the country;
- retailers generally operate with large amounts of cash. They do not issue invoices to customers and consequently the only indicator of sales may be the amounts lodged to the taxpayers’ bank account; and
- VAT is a transactions-based tax. For this reason, if a taxpayer makes a mistake in accounting for VAT on the sale of one item, it is likely that same mistake will be repeated each time that item is sold.
Grant Thornton has an extensive and varied client base of small traders, retailers, distance sellers and food suppliers. We can assist retailers with any VAT issues they may face and ensure that businesses do not fall into the many costly VAT pitfalls.