Hi, I have a question re: taxes… Let’s say I received an invoice from a freelancer last October, but only paid him this month. He’s charged me VAT, does that VAT appear in the October period when I received the bill, or in the current period when I actually pay him? Bullet seems to put it in Octover, but I’d prefer if it could come out in this period, if that makes sense?

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Hi, I have a question re: taxes… Let’s say I received an invoice from a freelancer last October, but only paid him this month. He’s charged me VAT, does that VAT appear in the October period when I received the bill, or in the current period when I actually pay him? Bullet seems to put it in Octover, but I’d prefer if it could come out in this period, if that makes sense?

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Peter Connor ⋅ Staff March 6, 2016
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So there are two ways you can do VAT. Cash basis (when the cash hits your account) or Invoice bases (when the invoice is sent). 
We operate Bullet on a Cash basis for the following reasons. 

  1. It helps cashflows as you’re liable for tax the minute you receive Bill or send an Invoice. 
  2. It’s how 99% of all SMB businesses run. 

So the liability will be calculated when you mark that bill as paid. If you want to bring it into a different period, just change the time of payment. 
But, revenue define your tax periods not Bullet. It’s also not good practice to mess around with VAT payments it can get complex and you’ll need to engage with an accountant to manually fix any VAT issues. 
We’ve designed the Bullet workflows to work really well for you and to reduce the amount of accountant engagement you need. 
Hope that helps.

#answer-2971
  1. accounts34 March 6, 2016
    OK, yes that's perfect, that's what I want. However, I did make a payment on 18 Feb, 2016 to an invoice that was issued on 31 August, 2015. It's not showing up in my VAT return that'll be due on 29 Feb. And it says I can't edit the bill, as I have already filed my tax return
  2. Peter Connor March 6, 2016
    So if you've actually filed a tax return then you'll need an accountant to do a ton of manual work for you.
    If you haven't paid/filed that tax return then you can do the following
    Click on Tax
    Click on the VAT return in for that period
    On the right click "mark as unpaid".
    Make the edits you want in the bill/invoice.
    Click on Tax
    Click on the VAT return in for that period
    On the right click "mark as paid".
    Hope that helps.
  3. accounts34 March 6, 2016
    Well, I mean it shouldn't be in the old VAT period? It should be in the current one? If the date that it was marked as paid on Bullet is Feb 18, 2016.
  4. Peter Connor March 6, 2016
    Bullet's designed and tested to work correctly. Just follow the workflows and returns it creates. Shifting stuff around is going to lead to problems later down the road.
    I can't comment on that exact invoice cause I can't see the details of it, when it was rec'd etc.
    Thanks Pete
  5. accounts34 March 6, 2016
    OK, I can see that it's appearing in the VAT3 period on bullet, 01 Jul - 31 Aug, and says that my amount due for that month is "-€460". Can I offset this somehow in my next VAT payment?
  6. accounts34 March 6, 2016
    So Bullet definitely seems to have put that VAT in by the invoice issue date, not by the date the payment was logged.
  7. Peter Connor March 6, 2016
    That's a question best answered by your accountant, we can't give accounting or tax advice I'm afraid.
    I'll get the tech team to have a look at this for you.
  8. accounts34 March 6, 2016
    Thanks
  9. Peter Connor March 6, 2016
    Hi,
    So tech have come back, this will explain it for you.

    Regardless of invoice/receipt basis of accounting, bills are *always* calculated using invoice basis (that means you can claim the VAT back for a bill even if you haven't paid for it yet). Its a quirk of the irish tax system to increase cash flow for businesses. The VAT for bills will be recorded against the issue date of the bill.
    In your case, this explains it as you were talking about a bill issued in august and paid for in Feb.
    Hope that helps.

    Pete
  10. accounts34 March 6, 2016
    No, I'm afraid that's simply not true, as we've been paying VAT based on payments, not invoices, for the 2 years we've been in business.
    http://www.crowleysdfk.ie/news-publications/cash-receipts-vs-invoice-basis-of-accounting-for-vat/
  11. Peter Connor March 6, 2016
    Hi there,
    If you have a look at the revenue website on the subject:
    http://www.revenue.ie/en/tax/vat/guide/general.html#section7
    Only monies received by you (ie your client payments) are taxes on a cash basis - that's why it's called the Monies Received Basis. Bills/payments out are always on the Invoice basis.
  12. accounts34 March 6, 2016
    I see. Thanks for clearing that up, appreciate the quick turnaround helping me!
    Best,
    Ciarán

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