Value Added Tax Consolidation Act 2010 section 62A

Adjustment of tax deductible in relation to unpaid consideration

Section 62A requires an accountable person to reduce the amount of VAT input credit claimed where the consideration for the related supply of goods or services has not been paid within six months.

• Where an accountable person deducts input VAT in a taxable period (the "initial period") but has not paid the supplier by the end of the third taxable period following that initial period, the VAT deducted must be reduced using the formula (A−B) × C, where A is total consideration exclusive of VAT, B is the amount paid, and C is the applicable VAT rate.
• If the accountable person subsequently pays all or part of the outstanding consideration, a re-adjustment is permitted in the period of payment using the formula D × C, where D is the amount paid in that period and C is the applicable VAT rate.
• No adjustment is required where the accountable person satisfies Revenue, on or before the due date for filing the return for the third taxable period after the initial period, that there are reasonable grounds for the non-payment.
• Revenue may make regulations governing the operation of this section.