What are the procedures for a business person to register for VAT and the obligation once completed?
For a VAT registration a business person will need to complete a Business as a sole trader or a Company Registration Form for companies together along with the VAT Supplementary Registration Form .A Notification of VAT Registration will be issued to the person once the form is submitted to FRCA, processed and approved.VAT registration is free of charge and can be processed at any FRCA office. There are 2 major obligations that a person should comply depending on the mode of VAT return lodgment approved. The registered person is required to file a VAT return within the due dates. A VAT registered person must maintain all his business accounts, documents and records. All business records kept are to be in English and all documents and records should not be less than seven years.
What happens if we don’t lodge or pay our return on time?
If we don’t lodge or pay our return on time penalties are generated automatically by the system which results in failure to lodge. There will be a late lodgment penalty of 25% with late payment penalty of 20%, and an additional 5% penalty for every month of default. When accounting for VAT registration on the time of supply, this would depend on whether you have done your VAT registration on a cash or accrual basis. For cash basis, the time of supply is when you receive or pay cash. But for accrual basis, the general rule on the time of supply following a tax invoice is issued by the supplier or any payment which is received by the supplier; when delivery of goods takes place. For example if an invoice is issued for a purchase and payments are to be done within 30 days, the time of supply would be the date of the invoice and not the payment date.