Commentary

V3.466 Adjustment by reference to a longer period

Part V3 Supplies, acquisitions and imports

V3.466 Adjustment by reference to a longer period

Partial exemption—adjustment of attribution

V3.466 Adjustment by reference to a longer period

Regulations made under VATA 1994, s 26(1) provide that a 'longer period' is applied to a taxable person in specified circumstances1 and, where this is the case, input tax provisionally attributed to taxable supplies in a prescribed accounting period is adjusted by reference to the longer period2. This adjustment is final, and it is not possible (except in the case of capital items, see V3.470) to make a subsequent adjustment to attribute the input tax to a later longer period3.

Definitions

'Prescribed accounting period'

The term 'prescribed accounting period' ('PAP') is defined to include both a prescribed accounting period defined in keeping with the provisions described in V5.102 and a special accounting period ('SAP') as defined below4.

A person's first PAP is sub-divided into two or more SAPs if it would otherwise be six months or longer5. A SAP is each of a succession of periods of the same length as the next PAP which does not exceed three months6. The last SAP ends on the day before the start of the next PAP which does not exceed three months7. The first SAP begins on the effective date of registration8 and ends on the day before the start of the second SAP9.

Example

X Ltd is registered from 15 May 20XX. Its first PAP ends on 30 November 20XX and subsequent PAPs end at three monthly intervals after that. The period 15 May 20XX to 30 November 20XX exceeds six months. The

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