S.I. No. 298/1986 - Value-Added Tax (Determination of Tax Due by Reference To Moneys Received) Regulations, 1986

S.I. No. 298 of 1986.

VALUE-ADDED TAX (DETERMINATION OF TAX DUE BY REFERENCE TO MONEYS RECEIVED) REGULATIONS, 1986.

The Revenue Commissioners, in exercise of the powers conferred on them by section 32 of the Value-Added Tax Act, 1972 (No. 22 of 1972), hereby make the following regulations:

1 Short title and commencement.

1.

1. These Regulations may be cited as the Value-Added Tax (Determination of Tax Due by reference to Moneys Received) Regulations, 1986.

2 Definitions.

2.

2. (1) In these Regulations—

"the Act" means the Value-Added Tax Act, 1972 ;

"taxable turnover", in relation to any period means the total of the amounts on which tax is chargeable for that period at any of the rates specified in section 11 (1) of the Act;

"turnover", in relation to any period, means the amount on which tax would be chargeable for that period in accordance with section 10 of the Act if section 6 of the Act were disregarded.

• (2) In these Regulations a reference to a paragraph, subparagraph or clause is to a paragraph, subparagraph or clause of the provision in which the reference occurs unless it is indicated that reference to some other provision is intended.

3 Determination of tax due by reference to moneys received.

3.

3. (1) A person who desires that, in accordance with section 14 (1) (a) of the Act, the amount of tax which becomes due by him during any taxable period (or part thereof), other than tax due in relation to supplies referred to in paragraph (5), should be determined by reference to the amount of moneys which he receives during such taxable period in respect of the supply of taxable goods or services, whether made before, on or after the specified day, shall give notice in writing to the Revenue Commissioners of his desire that the tax should be so determined and shall at the same time, unless he has already done so, furnish the following particulars to the Revenue Commissioners—

( a ) the nature of the business activities carried on by him;

( b ) the percentage of his taxable turnover, if any, which related to supplies of taxable goods and services to unregistered persons—

• (i) in the period of 12 months ended on the last day of the taxable period prior to the giving of the notice, or

• (ii) in the period from the commencement of his business activities to the last day of the taxable period referred to in clause (i), whichever is the shorter;

( c ) his estimate of the percentage of his taxable turnover which will relate to supplies of taxable goods and services to unregistered persons in the period of 12 months commencing with the beginning of the taxable period during which the notice is given,

( d ) the amount due to him on the last day of the taxable period prior to the giving of the notice in respect of the goods and services supplied by him.

• (2) Where a change occurs in any of the particulars furnished in accordance with paragraph (1), the taxable person shall, within thirty days immediately following the date of the change, furnish to the Revenue Commissioners particulars of the change.

• (3) ( a ) The Revenue Commissioners shall, if the inspector of taxes is satisfied that not less than 90 per cent. of the taxable turnover of the person is likely to be derived from the supply of taxable goods or services to unregistered persons, by notice in writing, authorise the person to determine the amount of tax which becomes due by him during any taxable period (or part thereof) during which the authorisation has effect by reference to the amount of the moneys which he receives during such taxable period from the supply, whether made before, on or after the specified day, of taxable goods or services:

( b ) An authorisation given under subparagraph (a) shall have effect while the person is a taxable person from the commencement of the taxable period during which it is given until the commencement of the taxable period during which it is cancelled in accordance with paragraph (9).

• (4) ( a ) A person who desires that, in accordance with section 14 (1) (b) of the Act, the amount of tax referable to taxable services which becomes due by him during any taxable period (or part thereof), other than tax due in relation to supplies referred to in paragraph (5), should be determined by reference to the amount of the moneys which he receives during such taxable period (or part thereof) in respect of the supply of taxable services, whether made before, on or after the specified day, shall give notice in writing to the Revenue Commissioners of his desire that the tax should be so determined, and the Revenue Commissioners shall, by notice in writing given to the person, authorise the tax to be determined accordingly.

( b ) An authorisation given in accordance with subparagraph (a) shall have effect while the person is a taxable person from the commencement of the taxable period during which it is given until the commencement of the taxable period during which it is cancelled in accordance with paragraph (9).

• (5) An authorisation under paragraph (3) or (4) shall not apply to tax chargeable on any supply of goods or services where the person to whom or to whose order the supply is made is a connected person.

• (6) Where a person, who for any period is authorised in accordance with paragraph (3) to determine the amount of tax which becomes due by him by reference to the amount of the moneys which he has received from the supply of taxable goods or services, ceases to be so authorised or ceases to be a taxable person, the tax payable by him for the taxable period during which any such cesser occurs shall be adjusted as follows:

( a ) the excess, if any, of the total amount due to him at the end of the first-mentioned period for goods and services supplied by him over the total amount due to him at the commencement of that period for goods and services supplied by him shall be apportioned between amounts by reference to which tax is to be determined and amounts by reference to which tax is not to be determined at each of the various rates of tax (including the zero rate) specified in section 11 (1) of the Act in the same proportions as the amounts of consideration by reference to which tax was to be determined and amounts by reference to which tax did not fall to be determined at each of those rates of tax bear to each other in the period consisting of six consecutive taxable periods (or the total number of taxable periods for which he was authorised as aforesaid, if less than six) next before the taxable period in which the cesser occurs,

( b ) the portions of the excess referred to in subparagraph (a) on which tax is chargeable at the various rates, as ascertained by apportionment in accordance with that subparagraph, shall be treated as consideration in respect of which tax at the said rates fell to be determined during the taxable period during which the cesser occurs and tax shall be chargeable accordingly.

• (7) Where a person who for any period is authorised in accordance with paragraph (4) to determine the amount of tax referable to taxable services which becomes due by him by reference to the amount of the moneys which he has received for the supply of taxable services ceases to be so authorised or ceases to be a taxable person, the tax payable by him for the taxable period during which any such cesser occurs shall be adjusted as follows:

( a ) the excess, if any, of the total amount due to him at the end of the first-mentioned period for services supplied by him over the total amount due to him at the commencement of that period for services supplied by him shall be apportioned between amounts by reference to which tax is to be determined and amounts by reference to which tax is not to be determined at each of the various rates (including the zero rate) specified in section 11 (1) of the Act in the same proportions as the amounts of consideration for the supplying of services by reference to which tax was to be determined and amounts by reference to which tax did not fall to be determined at each of those rates of tax bear to each other in the period consisting of six consecutive taxable periods (or the total number of taxable periods for which he was authorised as aforesaid if less than six) next before the taxable period in which the cesser occurs,

( b ) the portions of the excess referred to in subparagraph (a), which are referable to the supplying of services chargeable at the various rates, as ascertained by apportionment in accordance with that subparagraph, shall be treated as consideration in respect of which tax at the said rates fell to be determined during the taxable period during which the cesser occurs, and tax shall be chargeable accordingly.

• (8) An authorisation under this Regulation shall not affect the amount on which tax is chargeable in any of the circumstances referred to in subsections (2) to (9) of section 10 of the Act or tax chargeable on supplies referred to in paragraph (5).

• (9) ( a ) The Revenue Commissioners shall cancel an authorisation given in accordance with paragraph (3) or (4)—

• (i) if the person to whom the authorisation was given requests the cancellation by notice in writing given to the Revenue Commissioners,

• (ii) if, in the case of a person authorised in accordance with paragraph (3), the inspector of taxes ceases to be satisfied that, taking one taxable period with another, the person derives not less than 90 per cent. of his taxable turnover from the supply of taxable goods or services to unregistered persons, or

• (iii) if, on a review of any period consisting of three or more consecutive taxable periods, the inspector of taxes is satisfied that, in relation to supplies by a person authorised in accordance with paragraph (3) or (4), the amount of tax due by the person in respect of the amount of moneys which he has received in the period is less than 80 per cent. of the amount of tax which would be due in the period in relation to the said supplies if no authorisation under this Regulation had been issued.

( b ) An authorisation under this Regulation may be cancelled by notice in writing given by the Revenue Commissioners to the person who was the subject of the authorisation, and such cancellation shall have effect for the purposes of section 14 of the Act from the commencement of the taxable period during which notice was given or from the commencement of such later taxable period as may be specified in the notice.

• (10) No adjustment of liability as provided for in paragraph (6) or (7) shall be made if the cesser of authorisation as aforesaid was occasioned by the death of the taxable person, or if the period immediately preceding the date of the cesser during which he was authorised in accordance with the relevant paragraph exceeded six years.

• (11) For the purposes of this Regulation any question of whether a person is connected with another person shall be determined in accordance with the following provisions:

( a ) a person is connected with an individual if that person is the individual's husband or wife, or is a relative, or the husband or wife of a relative, of the individual or of the individual's husband or wife;

( b ) a person is connected with any person with whom he is in partnership and with the husband or wife or a relative of any individual with whom he is in partnership;

( c ) subject to paragraphs (d), and (e), a person is connected with another person if he has control over that other person or if the other person has control over the first-mentioned person or if both persons are controlled by another person or persons;

( d ) a body corporate is connected with another person if that person or persons connected with him have control of it or the person and persons connected with him together have control of it;

( e ) a body corporate is connected with another body corporate—

• (i) if a person has control of one and persons connected with him or he and persons connected with him have control of the other, or

• (ii) if a group of two or more persons has control of each body corporate and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom he is connected;

( f ) "relative" means brother, sister, ancestor or lineal descendant.

• (12) In this Regulation "control" in relation to a body corporate, means the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate, that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person, and, in relation to a partnership, means the right to a share or more than one-half of the assets, or of more than one-half of the income, of the partnership.

4.

GIVEN this 2nd day of September, 1986.

L. REASON,

Revenue Commissioner.

EXPLANATORY NOTE.

These Regulations amend the terms and conditions relating to the operation of the moneys received basis of accounting for VAT formerly contained in Regulation 7 of the Value-Added Tax Regulations, 1979. The new Regulations extend the definition of connected persons, transactions between which are excluded from the moneys received basis of accounting. They also give to an Inspector of Taxes the power to withdraw the moneys received basis where in a particular case he is satisfied that it has not proved to be a reliable measure of the true liability. The new Regulations also contain some other minor changes from the former Regulation 7 which is now repealed.