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Adjustment of VAT deductible where consideration is unpaid after six months

The Finance Act 2013 has inserted a new section 62A in the VAT Consolidation Act 2010. This deals with the adjustment of tax deductible in relation to unpaid consideration.

The point of this section is to provide for an adjustment of the amount of VAT deductible where a person who has made a deduction of VAT in a taxable period, has not paid the supplier for the related goods or services within six months of the end of that taxable period. For part payment that has been made, the adjustment is required for that element that remains unpaid after six months.

Where an adjustment is made and the person subsequently pays the full consideration or part thereof, a corresponding re-adjustment should be made. 

In exceptional circumstances, where there are genuine commercial reasons for not having paid the consideration and Revenue are satisfied with these reasons, no adjustment is required. This new provision has effect in relation to tax deducted in VAT periods from January 2014.

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