The Value Added Tax (Accounting and Records) Regulations 1989

Adjustments in the course of business

7.—(1) This regulation applies where–

(a) there is an increase in consideration, or

(b) there is a decrease in consideration

which includes an amount of tax and the increase or decrease occurs after the end of the prescribed accounting period in which the original supply took place.

(2) Where this regulation applies the taxable person shall adjust his value added tax account in accordance with the provisions of this regulation.

(3) The maker of the supply shall–

(a) in the case of an increase in consideration, make a positive entry; or

(b) in the case of a decrease in consideration, make a negative entry

for the relevant amount of tax in the tax payable portion of his value added tax account.

(4) The recipient of the supply, if he is a taxable person, shall–

(a) in the case of an increase in consideration, make a positive entry; or

(b) in the case of a decrease in consideration, make a negative entry

for the relevant amount of tax in the tax allowable portion of his value added tax account.

(5) Every entry required by this regulation shall, except where paragraph 6 below applies, be made in that part of the value added tax account which relates to the prescribed accounting period in which the increase or decrease is given effect in the business accounts of the taxable person.

(6) Where any entry required by this regulation is to be made in the value added tax account of an insolvent person then any such entry shall be made in that part of the value added tax account which relates to the prescribed accounting period in which the supply was made or received.

(7) None of the circumstances to which this regulation applies is to be regarded as giving rise to any application of regulation 5.