VAT Update: New Rules Regarding The Deductibility Of VAT In Relation To Unpaid Consideration

Are you aware of new rules? An important amendment was introduced in January 2014 in relation to VAT reclaimed on goods and services where the invoice remains unpaid for a number of months.

Where a person has reclaimed VAT on an invoice from a supplier but has not paid the supplier within three taxable periods the person is required to reduce their input VAT by reference to the VAT on the unpaid consideration.  If the consideration is subsequently paid to the supplier the VAT may then be reclaimed. 

It is important going forward that businesses are aware of this change to ensure that that input VAT is correctly accounted for.

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