Guide to the Apportionment of Input VAT

Value Added Tax (Apportionment)Regulations 2000 (SI 254 of 2000).

A new Revenue guide has issued dealing with the apportionment of input tax where a taxable person is not entitled to deduct the full amount of VAT on his or her inputs. This guide gives guidance on how to apply the rules in the new Section 12(4) of the VAT Act that came into effect on 1 May 2000 and the VAT (Apportionment) Regulations 2000. The guide is currently available on the Revenue Website. Any queries in relation to the practical application of the apportionment rules should be made to the taxable person’s appropriate Revenue office.

The guide is quite lengthy and covers two distinct areas; general legislative principles and specific instances of the application of the apportionment rules.

A crucial part of the Guide is in Section 10, which deals with transitional arrangements. Particular problems could arise from the fact that the primary law and the Regulations contain different start up dates.

In view of the complexity, Revenue decided to allow flexibility in respect of the operation of the new rules up to now. Interest and penalties are waived in respect of taxpayers who comply with certain conditions (see paragraph 3 of section 10 of the Guide), and who submit corrected returns within set deadlines. There are stricter deadlines for more apportionment -sensitive business i.e. financial sector and entities receiving grants and subsidies.