Small firms' lobby group, The Irish Small and Medium Enterprises Assocation (ISME), has expressed concern at the impact of Irish VAT collection procedures on small-business cash flow, calling for an immediate increase in the threshold for cash receipts basis to Ђ3m.
The association claims that accelerated VAT payment is imposing serious limitations on business working capital.
Up to 31 December 1992, many firms were entitled to pay VAT on a cash receipts basis, therefore transferring to the Exchequer the VAT element on any invoice when it was received.
That situation has radically altered and virtually all traders now have to pay VAT within an average of five weeks of the invoice being issued, irrespective of when the invoice is paid.
According to ISME, this means that, in effect, the VAT becomes due to be paid to the Revenue before value has been received by the company.