Revenue Tax Briefing

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Revenue Tax Briefing Issue 51, January 2003

INCREASE IN THE REDUCED RATE OF VAT

The reduced rate of VAT increased from 12.5 per cent to 13.5 per cent with effect from 1 January 2003.

Amongst the goods affected are fuels (electricity, gas, oil, coal, peat and other solid fuels), immovable goods, certain concrete blocks and ready to pour concrete, certain printed matter (including newspapers, periodicals and brochures), photography and photographic prints, nursery or garden centre stock, certain bakery products, live poultry, and antiques and works of art.

Amongst the services affected are the provision of hotel and guesthouse accommodation, restaurants, cinema/theatre admissions, sports facilities, waste disposal, agricultural services, development of and work on immovable goods, car-hire and the hire of pleasure boats, mobile homes and caravans, repair and maintenance of movable goods (including dry cleaning and shoe repair), driving instruction, and care of the human body (including hairdressing).

Sales of certain goods by means of vending machines are also subject to the new 13.5 per cent rate and traders may have needed to adjust their machines accordingly.

Issue of credit notes following the increase in the reduced rate of VAT

VAT regulations relating to the issue of credit notes provide that any credit note issued to VAT-registered traders*, on or after the date of a change in rate, should show VAT at the new rate even if the original invoice showed VAT at the old rate.

Accordingly, credit notes properly issued on or after 1 January 2003 to VAT-registered traders*, should show VAT at the new rate of 13.5 per cent.

As regards credit notes issued, on or after the date of a change in rate, to persons who are not VAT-registered, such credit notes should show VAT at the same rate as that shown on the original invoice.

Accordingly, credit notes properly issued on or after 1 January 2003 to persons who are not VAT-registered, in respect of a supply of goods or services on which VAT at 12.5 per cent was properly charged, should show VAT at the old rate of 12.5 per cent.

Further queries

Any further queries about the increase in the reduced rate of VAT, and/or the issue of credit notes following that increase, should be addressed to your local Inspector of Taxes.

Footnote

*Revenue has agreed, on a concessional basis, that where VAT at the rate of 12.5 per cent was properly charged on a supply of goods or services made on or before 31 December 2002 to VAT-registered traders who are entitled to recover only part of the VAT incurred on their inputs, credit notes properly issued on or after 1 January 2003 in relation to such supplies may show VAT at the rate of 12.5 per cent.