(1)(a) In computing the amount of tax payable by him in respect of a taxable period, [an accountable person]¹ may, insofar as the goods and services are used by him for the purposes of his taxable supplies or of any of the qualifying activities, deduct[, subject to making any adjustment required in accordance with section 12D,]²―

(i) the tax charged to him during the period by [other accountable persons]¹ by means of invoices, prepared in the manner prescribed by regulations, in respect of supplies of goods or services to him,

...³

(ii) in respect of goods imported by him in the period, the tax paid by him or deferred as established from the relevant customs documents kept by him in accordance with section 16(3),

[(iia) subject to such conditions (if any) as may be specified in regulations, the tax chargeable during the period, being tax for which he is liable in respect of intra-Community acquisitions of goods,

(iib) subject to and in accordance with regulations, in respect of goods supplied under section 3(1)(g) an amount equal to any residual tax included in the consideration for the supply,]⁴

[(iic) subject to such conditions (if any) as may be specified in regulations, in respect of goods referred to in section 3B, the tax due in the period in accordance with that section,]⁵

(iii) the tax chargeable during the period in respect of goods treated as supplied by him in accordance with section 3(1)(e),

[(iiia) the tax charged to him during the period by [other accountable persons]¹ in respect of services directly related to the transfer of ownership of goods specified in section 3(5)(b)(iii),]⁶

...⁷

[(iiic) the tax chargeable during the period, being tax for which [the accountable person]¹ is liable by virtue of [section 4B(6)(a), 4(8) or 8(1C)]⁸, in respect of a supply to that person of immovable goods,]⁹

...¹⁰

[(iiie) the tax chargeable during the period, being tax for which he is liable by virtue of section 6A(5)(a) in respect of investment gold (within the meaning of section 6A) received by him,]¹¹

(iv) the tax chargeable during the period in respect of services treated as supplied by him for consideration in the course or furtherance of his business in accordance with [section 5(3)(c)]¹²,

...⁷

[(va) the tax chargeable during the period, being tax for which [the accountable person]¹ is liable by virtue of section 8(1A)(f) in respect of goods which are installed or assembled; but this subparagraph shall apply only where [the accountable person]¹ would be entitled to a deduction of that tax elsewhere under this subsection if that tax had been charged to such person by [another accountable person]¹,

(vb) the tax chargeable during the period, being tax for which [the accountable person]¹ is liable by virtue of section 8(1A)(g) in respect of the supply to such person of gas through the natural gas distribution network, or of electricity; but this subparagraph shall apply only where [the accountable person]¹ would be entitled to a deduction of that tax elsewhere under this subsection if that tax had been charged to such person by [another accountable person]¹,]¹³

[(vc) the tax chargeable during the period, being tax for which the principal is liable by virtue of section 8(1B) in respect of construction operations services received by that principal; but this subparagraph shall apply only where that principal would be entitled to a deduction of that tax elsewhere under this subsection if that tax had been charged to such principal by another accountable person,]¹⁴

[(vd) the tax chargeable during the period, being tax for which the recipient (within the meaning of section 8(1D)) is liable by virtue of section 8(1D) in respect of greenhouse gas emission allowances (within the said meaning) received by that recipient: but this subparagraph shall apply only where the recipient would be entitled to a deduction of that tax elsewhere under this subsection if that tax had been charged to such recipient by an accountable person,]¹⁵

[(vi) subject to and in accordance with regulations (if any), residual tax referred to in section 12B,]¹⁶

[(via) the residual tax referred to in section 12C, being residual tax contained in the price charged to him for the purchase of agricultural machinery (within the meaning of section 12C), by means of invoices issued to him during the period by flat-rate farmers,]¹⁷

[(vib) the residual tax referred to in section 12C, being residual tax contained in the price charged to [the accountable person]¹ for the purchase of agricultural machinery (within the meaning of section 12C), by means of documents issued to that person during the period in accordance with section 12C(1B),]¹⁸

(vii) the tax chargeable during the period, being tax for which he is liable by virtue of section 8(2), in respect of services received by him, ...¹⁹

(viii) [flat-rate addition, which shall be deemed to be tax,]²⁰ charged to him during the period by means of invoices prepared in the manner prescribed by regulations and issued to him in accordance with [section 12A, and]²¹

[(ix) subject to subsection (4) and regulations (if any), 20 per cent of the tax charged to that accountable person in respect of the purchase, hiring, intra-Community acquisition or importation of a qualifying vehicle (within the meaning assigned by paragraph (c)), where that vehicle is used primarily for business purposes, being at least 60 per cent of the use to which that vehicle is put, and where that accountable person subsequently disposes of that vehicle the tax deducted by that person in accordance with this subsection shall be treated as if it was not deductible by that person for the purposes of [paragraph 12(c) of Schedule 1]²²:]²³

[Provided that this paragraph shall not apply to-

(I) [an accountable person]¹ referred to in subsection (1A)(c) or (2)(b) of section 8, or

(II) [an accountable person]¹ referred to in subsection (1A)(d) or (2)(c) of section 8 unless the tax relates to racehorse training services supplied by him.]²⁴

(b) In paragraph (a) "qualifying activities" means-

(i) transport outside the State of passengers and their accompanying baggage,

[(ia) supplies of goods which, by virtue of section 3(6)(d), are deemed to have taken place in the territory of another Member State:

Provided that the supplier is registered for value-added tax in that other Member State,]²⁵

[(ib) the operation, in accordance with Commission Regulation (EC) No. 2777/2000 of 18 December 2000, of the Cattle Testing or Purchase for Destruction Scheme, by a body who is [an accountable person]¹ by virtue of the Value-Added Tax (Agricultural Intervention Agency) Order, 2001 (S.I. No. 11 of 2001).]²⁶

(ii) services specified in [paragraph 6, 7 or 8 of Schedule 1]²⁷, supplied-

(I) outside the Community, or

(II) directly in connection with the export of goods to a place outside [the Community,]²⁸

[(iia) services consisting of the issue of new stocks, new shares, new debentures or other new securities by [the accountable person]¹ in so far as such issue is made to raise capital for the purposes of [the accountable person's]¹ taxable supplies, and]²⁹

(iii) supplies of goods [other than supplies of goods referred to in section 3(6)(d))]³⁰ or services outside the State[, other than services consisting of the hiring out of motor vehicles (as defined in subsection (3)(b)) for utilisation in the State,]³¹ which would be taxable supplies if made in the State.

[(c) For the purposes of paragraph (a)(ix) and subsection (4)(ba), a "qualifying vehicle" means a motor vehicle which, for the purposes of vehicle registration tax is first registered, in accordance with section 131 of Finance Act 1992, on or after 1 January 2009 and has, for the purposes of that registration, a level of CO2 emissions of less than 156g/km.]³²

(1A)(a) A person who, by election or in accordance with the provisions of section 8(4) is deemed to become [an accountable person]¹, shall, in accordance with regulations, be entitled, in computing the amount of tax payable by him in respect of the first taxable period for which he is so deemed to be [an accountable person]¹, to treat as tax deductible under subsection (1) such part of the value of the stock-in-trade (within the meaning of section 34) held by him immediately before the commencement of that taxable period as could reasonably be regarded as the amount which he would be entitled to claim under the said subsection (1) if he had been [an accountable person]¹ at the time of the delivery to him of such stock-in-trade.

(b) No claim shall lie under this subsection for a deduction for the tax relating to any stock-in-trade (within the meaning of section 34) if, and to the extent that, a deduction under subsection (1) could be claimed apart from this subsection.

...²

(2) If, in relation to any taxable period, the total amount deductible under this section exceeds the amount which, but for this section, would be payable in respect of such period, the excess shall be [refunded to [an accountable person]¹ in accordance with section 20(1)]²[, but subject to [sections 20(1A) and 20(5)]³.]⁴

(3)(a) Notwithstanding anything [in this section, a deduction of tax under this section]¹ shall not be made if, and to the extent that, the tax relates to-

[(i) expenditure incurred by [the accountable person]² on food or drink, or accommodation other than qualifying accommodation in connection with attendance at a qualifying conference as defined in paragraph (ca), or other personal services, for [the accountable person]², [the accountable person's]² agents or employees, except to the extent, if any, that such expenditure is incurred in relation to a supply of services in respect of which [that accountable person]² is accountable for tax,]³

[(ia) expenditure incurred by [the accountable person]² on food or drink, or accommodation or other entertainment services, where such expenditure forms all or part of the cost of providing an advertising service in respect of which tax is due and payable by [the accountable person]²,]⁴

(ii) entertainment expenses incurred by [the accountable person]², his agents or his employees,

(iii) [subject to subsection (1)(a)(ix)]⁵ the [purchase, hiring, intra-Community acquisition, or importation]⁶ of motor vehicles otherwise than as stock-in-trade [or for the purpose of the supply thereof by a person supplying financial services of the kind specified in [paragraph 6(1)(e) of Schedule 1]⁷ in respect of those motor vehicles as part of an agreement of the kind referred to in section 3(1)(b)]⁸ or for the purposes of a business which consists in whole or part of the hiring of motor vehicles or for use, in a driving school business, for giving driving instruction, [or]⁹

(iv) the purchase [intra-Community acquisition or importation]¹⁰ of petrol otherwise than as stock-in-trade, ...¹¹

[(iva) the procurement of a supply of contract work where such supply consists of the handing over of goods to which this paragraph applies.]¹²

(v) ...¹³

(b) In paragraph (a) of this subsection "motor vehicles" means motor vehicles designed and constructed for the conveyance of persons by road and sports motor vehicles, estate cars, station wagons, motor cycles, motor scooters, mopeds and auto cycles, whether or not designed and constructed for the purpose aforesaid, excluding vehicles designed and constructed for the carriage of more than 16 persons (inclusive of the driver), invalid carriages and other vehicles of a type designed for use by invalids or infirm persons.

[(c) In subparagraph (i) of paragraph (a), reference to the provision of accommodation includes expenditure by [the accountable person]² on a building, including the fitting out of such building, to provide such accommodation.

[(ca) For the purposes of subparagraph (a)(i)-

"delegate" means a taxable person or a taxable person's employee or agent who attends a qualifying conference in the course or furtherance of that taxable person's business;

"qualifying accommodation" means the supply to a delegate of a service consisting of the letting of immovable goods or accommodation covered by [paragraph 11 of Schedule 3]¹⁴, for a maximum period starting from the night prior to the date on which the qualifying conference commences and ending on the date on which the conference concludes;

"qualifying conference" means a conference or meeting in the course or furtherance of business organised to cater for 50 or more delegates, which takes place on or after 1 July 2007 at a venue designed and constructed for the purposes of hosting 50 or more delegates and in respect of which the person responsible for organising the conference issues in writing the details of the conference to each taxable person who attends or sends a delegate, and such details shall include-

(i) the elocation and dates of the conference,

(ii) the enature of the business being conducted,

(iii) the number of delegates for whom the conference is organised, and

(iv) the name, business address and VAT registration number of the person responsible for organising the conference.]¹⁵

(d) In subparagraph (ii) of paragraph (a), "entertainment expenses" includes expenditure on a building or facility, including the fitting out of such building or facility, to provide such entertainment.]¹⁶

(3A) Notwithstanding anything in this section, where―

(a) the provisions of subsection (3) or (8) of section 10A or subsection (3) of section 10B have been applied to a supply of goods to [an accountable person]¹, or

(b) a taxable dealer deducts residual tax, in accordance with subsection (1)(a)(vi), in respect of a supply of a means of transport to [an accountable person]¹,

[that accountable person]¹ shall not deduct, in accordance with subsection (1), any tax in relation to the supply to that person.

(4)(a) In this subsection―

"deductible supplies or activities" means the supply of taxable goods or taxable services, or the carrying out of qualifying activities as defined in subsection (1)(b);

"dual-use inputs" means [movable]¹ goods or services (other than goods or services on the purchase or acquisition of which, by virtue of subsection (3), a deduction of tax shall not be made[, or services related to the development of immovable goods that are subject to the provisions of section 12E]²) which are not used solely for the purposes of either deductible supplies or activities or non-deductible supplies or activities;

"non-deductible supplies or activities" means the supply of goods or services or the carrying out of activities other than deductible supplies or activities;

"total supplies and activities" means deductible supplies or activities and non-deductible supplies or activities.

(b) Where [an accountable person]³ engages in both deductible supplies or activities and non-deductible supplies or activities then, in relation to that person's acquisition of dual-use inputs for the purpose of that person's business for a period, that person shall be entitled to deduct in accordance with subsection (1) only such proportion of tax, borne or payable on that acquisition, which is calculated in accordance with the provisions of this subsection and regulations, as being attributable to that person's deductible supplies or activities and such proportion of tax is, for the purposes of this subsection, referred to as the "proportion of tax deductible".

[(ba) For the purposes of this subsection, the reference in paragraph (b) to "tax, borne or payable" shall, in the case of an acquisition of a qualifying vehicle (within the meaning assigned by subsection (1)(c)) be deemed to be a reference to "20 per cent of the tax, borne or payable".]⁴

(c) For the purposes of this subsection and regulations, the proportion of tax deductible by [an accountable person]³ for a period shall be calculated on any basis which results in a proportion of tax deductible which correctly reflects the extent to which the dual-use inputs are used for the purposes of that person's deductible supplies or activities and has due regard to the range of that person's total supplies and activities.

(d) The proportion of tax deductible may be calculated on the basis of the ratio which the amount of a person's tax-exclusive turnover from deductible supplies or activities for a period bears to the amount of that person's tax-exclusive turnover from total supplies and activities for that period but only if that basis results in a proportion of tax deductible which is in accordance with paragraph (c).

(e) Where it is necessary to do so to ensure that the proportion of tax deductible by [an accountable person]³ is in accordance with paragraph (c), [an accountable person]³ shall―

(i) calculate a separate proportion of tax deductible for any part of that person's business, or

(ii) exclude, from the calculation of the proportion of tax deductible, amounts of turnover from incidental transactions by that person of the type specified in [paragraph 6 of Schedule 1]⁵ or amounts of turnover from incidental transactions by that person in immovable goods.

(f) The proportion of tax deductible as calculated by [an accountable person]³ for a taxable period [shall]⁶ be adjusted in accordance with regulations, if, for the [accounting year]⁷ in which the taxable period ends, that proportion does not correctly reflect the extent to which the dual-use inputs are used for the purposes of that person's deductible supplies or activities or does not have due regard to the range of that person's total supplies and activities.

(4A)(a) Where an accountable person deducts tax in relation to the purchase, intra-Community acquisition or importation of a qualifying vehicle in accordance with subsection (1)(a)(ix) and that person disposes of that qualifying vehicle within 2 years of that purchase, acquisition or importation, then that person shall be obliged to reduce the amount of the tax deductible by that person for the taxable period in which the vehicle is disposed of by an amount calculated in accordance with the following formula:

TD  x  (4 - N)
4

where—

TD is the amount of tax deducted by that accountable person on the purchase, acquisition or importation of that vehicle, and

N is a number that is equal to the number of days from the date of purchase, acquisition or importation of the vehicle by that accountable person to the date of disposal by that person, divided by 182 and rounded down to the nearest whole number,

but if that N is greater than 4 then N shall be 4.

(b) Where an accountable person deducts tax in relation to the purchase, intra-Community acquisition or importation of a qualifying vehicle in accordance with subsection (1)(a)(ix) and the vehicle is subsequently used for less than 60 per cent business purposes in a taxable period, then that person is obliged to reduce the amount of tax deductible by that person for that taxable period by an amount calculated in accordance with the following formula:

TD  x  (4 - N)
4

where—

TD is the amount of tax deducted by that accountable person on the purchase, acquisition or importation of that vehicle, and

N is a number that is equal to the number of days from the date of purchase, acquisition or importation of the vehicle by that accountable person to the first day of the taxable period in which the vehicle is used for less than 60 per cent business purposes, divided by 182 and rounded down to the nearest whole number, but if that N is greater than 4 then N shall be 4.

(5) ...