I assume the Deputy is referring to construction sub-contractors who are subject to reverse-charge VAT, whereby the principal contractor remits the VAT related to their output to the Revenue Commissioners. This is not a new measure, having been introduced in 2008. In any event, I am advised by the Revenue Commissioners that such sub-contractors, who have no output VAT liability, should be in a continuous repayable position in relation to VAT on their inputs.
While there have been no recent legislative changes to the time of payment of VAT, Revenue has extended their less frequent filing/payment arrangements to additional eligible customers from 1 January 2014. Such businesses would have a reduced cost of administration owing to the requirement for less frequent filing of returns and payments (bi-annual, four-monthly or quarterly) rather than two-monthly. However, where such companies are in a continuous repayable position there could be cash flow issues. Companies in such a position may, if they wish, advise the Collector General's Office that they wish to remain on bi-monthly returns and payments basis and the Collector General will make the necessary adjustment.
The Deputy also raises the issue of persons who are not paid for jobs that have been completed. I would refer the Deputy to the introduction of section 62A of the Value-Added Tax Consolidation Act 2010. In normal circumstances an accountable person is entitled to an input credit for VAT charged to that person by means of invoices. Section 62A obliges accountable persons who have taken credit for input VAT on or after 1 January 2014 to reverse that input credit where the invoice amount is not paid to the supplier within 6 months. Section 62A is a pro-business measure designed to encourage prompt payment and should positively impact on the contractors mentioned by the Deputy.
