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Adjustment of input tax deemed deducted

Goods and Services Tax (General) Regulations

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—(1) This regulation applies to a transferee mentioned in section 34A of the Act where the assets transferred to the transferee are to be used in carrying on the same kind of business as that carried on by the transferor of the assets in making either —(a)non-specified taxable supplies; or(b)both non-specified taxable supplies and exempt supplies,and during the relevant period, the transferee uses or forms an intention to use the assets —(c)in making exempt supplies or both non-specified taxable supplies and exempt supplies, instead of non-specified taxable supplies only;(d)in making exempt supplies, instead of both non-specified taxable supplies and exempt supplies; or(e)in continuing to make both non-specified taxable supplies and exempt supplies, but reducing the proportion of non-specified taxable supplies to exempt supplies.(2) Except as the Comptroller otherwise allows, where this regulation applies, the transferee shall on the return for the prescribed accounting period in which the use occurs or the intention is formed, as the case may be, account of an amount of the input tax deemed to have been deducted in respect of the supplies which have ceased or are intended to cease to be non-specified taxable supplies, in accordance with such method as the Comptroller may determine, and he shall repay the said amount to the Comptroller.(3) For the purposes of this regulation, any question as to the nature of any supply shall be determined in accordance with the provisions of the Act and any regulations or orders made thereunder in force at the time the input tax was deemed to have been deducted.(4) Subject to paragraph (5), paragraph (2) does not apply where the input tax was deemed to have been deducted in respect of land supplied to the transferee which is no longer to be used to make a taxable supply of land, because the transferee uses or forms an intention to use the land for making —(a)both taxable supplies, and exempt supplies referred to in paragraph 2(c) of Part 1 of the Fourth Schedule to the Act; or(b)such exempt supplies.(5) Where any land is supplied to the transferee with any building thereon which is used or to be used for making exempt supplies, the transferee shall, for the purposes of paragraph (2), repay to the Comptroller input tax deemed to have been deducted in respect of only the building in accordance with such method as the Comptroller may determine.(6) In this regulation, “relevant period” means —(a)where the prescribed accounting period during which the supply referred to in paragraph (1) was made ends before 1st January 2007, a period of 6 years commencing on the day the supply was made; or(b)where the prescribed accounting period during which the supply referred to in paragraph (1) was made ends on or after 1st January 2007, a period of 5 years commencing on the day the supply was made.

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