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Disallowed VAT Input Tax

Disallowed VAT Input Tax

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After an inspection VAT was disallowed on unpaid purchase invoices more than 6 months old.

Can anyone direct to me the legislation or case that allows HMRC to disallow input tax that was incurred on a properly documented supply even though the supplier was not paid for whatever reason within six months?
Raymond Lisle

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By Anonymous
23rd Jun 2006 14:58

SI 1995 / 2518
Part XIXB of SI 1995 No 2518 (The VAT Regulations 1995) deals with repayment of input tax where the invoice has not been settled. The rules changed at the beginning of 2003.

You won't find Part XIXB if you've got an old copy of the SI as this section was inserted by SI 2002 No 3027.

The rules on input VAT match the rules on output VAT which were changed at the same time. Basiclly if the debt is unpaid after 6 months the debtor can claim the output VAT back and the creditor has to repay the input VAT. Previously the debtor had to write to the creditor and tell him he was writing off the VAT.

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