VALUE ADDED TAX 1 These Regulations may be cited as the Value Added Tax (Amendment)(No. 4) Regulations 2002 and come into force on 1st January 2003. 2 The Value Added Tax Regulations 1995 are amended as follows. 3 After “taxable person” in regulation 166A insert “, and the relevant supply was made before 1st January 2003,”. 4 At the beginning of regulation 170(1) omit “Where” and insert “Subject to regulation 170A below, where”. 5 After regulation 170 insert the following regulation— Attribution of payments received under certain credit agreements 170A 1 Where— a the claimant made a supply of goods and, in connection with that supply, a supply of credit; b those supplies were made under a hire purchase, conditional sale or credit sale agreement; and c a payment is received in relation to those supplies (other than a payment of an amount upon which interest is not charged), the payment shall be attributed to each supply in accordance with the rules set out in paragraph (2) below. 2 The payment shall be attributed— a as to the amount obtained by multiplying it by the fraction A B , to the supply of credit; and b as to the balance, to the supply of goods, where— A is the total of the interest on the credit provided under the agreement under which the supplies are made (determined as at the date of the making of the agreement); and B is the total amount payable under the agreement, less any amount upon which interest is not charged. 3 Where an agreement provides for variation of the rate of interest after the date of the making of the agreement then, for the purposes of the calculation in paragraph (2) above, it shall be assumed that the rate is not varied. . 6 In regulation 171— a in sub-paragraph (1)(b)(ii) for “regulation 170” substitute “regulations 170 or 170A”; and b in sub-paragraph (3) for “or 170” substitute “, 170 or 170A”. 7 Immediately before regulation 172C insert the following— Application 172ZC This Part applies where the relevant supply was made before 1st January 2003. . 8 Immediately after Part XIXA insert the following— PART XIXB REPAYMENT OF INPUT TAX WHERE CONSIDERATION NOT PAID Application 172F This Part applies where the supply in relation to which a person has claimed credit for input tax was made on or after 1st January 2003. Interpretation 172G In this Part— “relevant period” means 6 months following— the date of the supply, or if later, the date on which the consideration for the supply, or (as the case may be) the unpaid part of it, became payable. Repayment of input tax 172H 1 Subject to paragraph (5) below, where a person— a has not paid the whole or any part of the consideration for a supply by the end of the relevant period; and b has claimed deduction of the whole or part of the VAT on the supply as input tax (“the deduction”), he shall make an entry in his VAT account in accordance with paragraphs (2) and (3) below. 2 The person shall make a negative entry in the VAT allowable portion of that part of his VAT account which relates to the prescribed accounting period of his in which the end of the relevant period falls. 3 The amount of the negative entry referred to in paragraph (2) above shall be such amount as is found by multiplying the amount of the deduction by a fraction of which the numerator is the amount of the consideration for the supply which has not been paid before the end of the relevant period and the denominator is the total consideration for the supply. 4 None of the circumstances to which this regulation applies is to be regarded as giving rise to any application of regulations 34 and 35. 5 This regulation does not apply where, for input tax, the operative date for VAT accounting purposes is the date mentioned in regulation 57(b) above. Restoration of an entitlement to credit for input tax 172I 1 Where a person— a has made an entry in his VAT account in accordance with regulation 172H (“the input tax repayment”); b has made the return for the prescribed accounting period concerned, and has paid any VAT payable by him in respect of that period; and c after the end of the relevant period, has paid the whole or part of the consideration for the supply in relation to which the input tax repayment was made, he shall make an entry in his VAT account in accordance with paragraphs (2) and (3) below in respect of each such payment made. 2 The person shall make a positive entry in the VAT allowable portion of that part of his VAT account which relates to the prescribed accounting period of his in which payment of the whole or part of the consideration was made. 3 The amount of the positive entry referred to in paragraph (2) above shall be such amount as is found by multiplying the amount of the input tax repayment by a fraction of which the numerator is the amount of the payment referred to in paragraph (1) (c) above and the denominator is the total consideration for the supply. 4 None of the circumstances to which this regulation applies is to be regarded as giving rise to any application of regulations 34 and 35. 5 In this regulation, “return” means the return which a person is required to make in accordance with regulation 25. Attribution of payments 172J The rules on the attribution of payments in regulation 170 and, as the case may be, 170A above shall apply for determining whether anything paid is to be taken as paid by way of consideration for a particular supply. . M. J. Eland, Commissioner of Customs and Excise New King’s Beam House, 22 Upper Ground, London SEI 9PJ 6th December 2002