Cash Receipts Basis VAT in Ireland: Records and Examples

Under Ireland’s moneys received basis, an eligible VAT-registered trader accounts for sales VAT when payment is received, rather than when the invoice is issued. The VAT rate is still the rate that applied when the goods or services were supplied, even if the customer pays after the rate changes.

“Cash receipts basis” and “cash basis” are common names for the same method. Cash receipts basis VAT in Ireland changes the timing of output VAT on qualifying sales. It does not remove the normal requirement to issue invoices or change the VAT rate attached to a supply.

Under the normal invoice basis, the VAT liability arises by reference to the supply or the invoice, not the customer’s eventual payment. Under the moneys received basis, the receipt brings the related sales VAT into the relevant taxable period. A payment received in March against a January invoice is therefore a March receipt for this purpose, subject to the scheme rules and the terms of the trader’s authorisation.

The period calculation needs more than a total from the bank statement. Each actual or deemed receipt must remain connected to the invoice, supply date, VAT rate and any unpaid balance. That invoice-to-receipt trail is what shows why a particular amount of output VAT belongs in the period and what remains to be recognised later.

Eligibility, application and transactions outside the basis

A VAT-registered person may apply to use the moneys received basis through either of two routes. Turnover must not exceed, or be likely to exceed, €2 million in any continuous 12-month period. Alternatively, at least 90% of supplies must be made to customers who are not entitled to a full VAT deduction or who are not VAT registered. Revenue notes that the second route commonly covers retailers, public houses, restaurants and similar businesses that sell mainly to private individuals. The tests and current exclusions are set out in Revenue’s eligibility guidance.

Eligibility does not make the change automatic. A person registering for VAT for the first time indicates the choice on the registration form. An existing VAT-registered trader must apply to their Revenue office in writing. Revenue’s approval takes effect from the start of the taxable period in which it is issued, or from a later date specified in the approval. The working paper should therefore retain the approval date and avoid treating earlier receipts as if the authorisation already applied.

The basis cannot be used for every transaction. Revenue currently excludes:

• transactions with a connected person;
• construction services supplied by a subcontractor to a principal contractor;
• property transactions involving the creation of long leases before 1 July 2008;
• intra-Community acquisitions of goods and services; and
• imports of goods into the State.

These exclusions apply to transactions, so a trader may need to keep different VAT treatments visible within the same period. Normal invoicing requirements also continue for sales accounted for on the moneys received basis.

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The source fields that make each receipt traceable

Three dates do different jobs in a receipts-basis VAT record:

• Supply date: identifies when the goods or services were supplied and fixes the applicable VAT rate.
• Invoice date: anchors the sales invoice and the normal invoicing record.
• Receipt date: places the amount received, or deemed to have been received, in a taxable period.

Under the moneys received basis, the VAT rate is the rate applicable when the goods or services were supplied, not a later rate in force when payment was received. Revenue’s guidance on VAT rates under the moneys received basis states that the supply-time rate continues to apply where rates change. A payment date on its own cannot establish the correct VAT amount.

For each sale, retain the invoice number, customer, supply date, invoice date, VAT-exclusive amount, VAT rate, VAT amount and gross invoice amount. For each receipt, retain the receipt date, amount, bank or cash-book reference, and the invoice or invoices to which it was allocated. Agent statements, withholding records and offset documentation belong with the receipt evidence where they apply.

Keep those source fields distinct from calculated fields. The amount allocated to an invoice, the VAT fraction applied, output VAT recognised in the period and the balance carried forward are working-paper calculations. Keeping the distinction visible makes it possible to change an allocation without overwriting what the invoice or payment record actually says.

Revenue requires sales to be recorded and separated by VAT rate, including exempt transactions, and lists the records that support sales entries. These include invoices, sales receipts, delivery notes, cash books and bank statements. The receipt-basis working paper connects that existing evidence; it does not replace it.

Worked ledger for full payments, partial payments and balances

The following illustrative ledger covers the January–February taxable period, with closing balances measured at the end of February. It assumes that the trader is authorised to use the moneys received basis and that each sale is a qualifying transaction. Invoice details and receipt details are source fields. The allocation, VAT recognised and closing balance are calculations.

Invoice	Supply / invoice date	Invoice value	Receipt in period	Amount allocated	Output VAT in period	Closing balance
A100	10 Jan / 12 Jan	€1,000 net + €230 VAT = €1,230	€1,230 on 5 Feb	€1,230	€230	€0
A101	18 Jan / 18 Jan	€2,000 net + €460 VAT = €2,460	€615 on 20 Feb	€615	€115	€1,845
A102	2 Feb / 2 Feb	€1,000 net + €135 VAT = €1,135	None	€0	€0	€1,135

Invoice A100 is fully settled, so all €230 of its VAT enters the period. Invoice A101 is paid only in part. Because the €615 receipt is VAT-inclusive and the invoice carries one 23% rate, the VAT element is €615 × 23 / 123 = €115. The unpaid €1,845 remains on the debtor balance and produces no receipt-basis output VAT in this period. A102 remains wholly unpaid, so its €135 VAT is not included yet.

For a single-rate VAT-inclusive amount, the fraction is the VAT rate divided by 100 plus that rate. This calculation works only after the receipt has been assigned to the correct invoice and supply rate. If a remittance covers several invoices, record the payer’s stated allocation or match it to the remittance advice and customer ledger. Where it covers invoices at different VAT rates, split the receipt between those invoices before applying the relevant VAT fraction to each part.

An unexplained €1,845 bank credit is not enough to decide whether it settles A101, A102 or parts of both. Show it as an unallocated exception while the supporting evidence is obtained, but resolve its VAT treatment before finalising the return. Leaving a receipt unallocated does not, by itself, move the related VAT liability to a later period.

When the relevant receipt is not the net bank credit

The amount credited to the bank can be less than the amount treated as received for VAT. Revenue’s rules on sums included in the moneys received basis cover money credited to an account, money received by another person on the supplier’s behalf, specified deductions and amounts treated as received when a liability is resolved.

If an agent collects €1,230 from a customer and remits €1,180 after retaining a €50 fee, the receipt record should not start and end with the €1,180 bank credit. Revenue treats the agent’s fees and expenses as part of moneys received. The working paper should show the €1,230 gross receipt, the €50 deduction and the €1,180 net remittance, supported by the agent’s statement.

Professional Services Withholding Tax works on the same gross-evidence principle for VAT. Revenue’s example treats PSWT withheld from a professional fee as part of the consideration received. A solicitor with a gross fee of €1,230, including €230 VAT, is deemed to have received €1,230 even where €200 of PSWT is withheld from the VAT-exclusive fee. The withholding record explains the difference between the consideration used for VAT and the cash credited.

An offset may also create a deemed receipt. If a customer debt is settled against a credit due on another business transaction, the date of the offset is the receipt date. Keep the agreement, ledger entries and invoices that show which liabilities were extinguished. Money paid to Revenue by a third party under its power of attachment can likewise form part of the supplier’s moneys received.

Do not generalise these treatments into a rule that every deduction is a receipt. Construction services supplied by a subcontractor to a principal contractor are excluded from the ordinary moneys received basis and are subject to the construction reverse charge. Relevant Contract Tax records therefore need to be read with the reverse-charge rules, not forced through the worked calculation used for an ordinary taxable sale.

Reconcile the period without hiding exceptions

A period-end control should explain the movement in unpaid sales as well as the VAT recognised from receipts. Start with invoices outstanding at the opening date, add current-period sales invoices and supported adjustments, deduct receipts or deemed receipts allocated during the period, and reconcile the result to the closing debtor balance. Separately total the output VAT contained in those allocated receipts by the VAT rate fixed at the supply date.

Agree the receipt-allocation ledger to the sales records, invoice register, receipts, cash book and bank evidence. The control should expose rather than absorb these exceptions:

• receipts in the bank that have not yet been allocated to an invoice;
• ledger allocations with no matching cash, agent, withholding or offset evidence;
• receipts dated outside the taxable period;
• duplicate allocations or amounts allocated above the invoice balance;
• VAT calculated at the payment-date rate rather than the supply-date rate; and
• closing invoice balances that do not agree with the debtor records.

A difference is not cleared by moving it into a general adjustment. Record what is known, obtain the source document or explanation still required, and resolve the VAT treatment before finalising the return. Leaving a receipt as an exception does not, by itself, defer any VAT liability attached to money already received.

Changes of accounting basis need an additional check. When Revenue authorises a move from the invoice basis, a later payment must not be taxed again if VAT was already accounted for on the underlying supply. Revenue’s changeover guidance makes that boundary explicit.

The moneys received basis concerns the timing of VAT on covered sales. It does not, by itself, replace the rules or evidence for deducting VAT on purchases. The separate workflow for preparing an Irish VAT3 return from supplier invoices covers invoice capture, VAT-rate splits and input-VAT checks without duplicating them here.

The annual Return of Trading Details is also a separate reporting task. Its sales and purchase totals should remain reconcilable to the underlying records, but it is not calculated by simply carrying forward the period’s receipt-basis output VAT. See preparing Ireland’s Return of Trading Details from invoices for that annual reconciliation.