VAT

Changing Or Cancelling Your VAT Registration

Changes In Names & Addresses

Your VAT registration is based on information supplied to Inland Revenue Department (IRD) when you completed the VAT Registration Form. A registered taxpayer must notify the IRD in writing within twenty-one days (21) days of:

Any change in the particulars of the business provided in the application for registration; or
The closure of the business.

You must also inform the IRD when there is a:

Change of name or trade name or address;
Change of place of business;
Change of constitution;
Change of nature of principal activity; or
Any change in circumstances if the person ceases to operate or closes on a temporary basis.

You are to report the changes to the IRD in writing using the VAT Application to Change Registration Details or Cancel Registration

Payment Problems

How You Can Help Yourself

As a VAT registered Taxpayer, you need to ensure that you submit your VAT Return on or before the 21st of every month, along with any outstanding VAT due. If you don't, you will receive an automatic penalty for late filing and late payment. So if you think you won't be able to pay your VAT by the due date, you should act immediately. There are several things you may be able to do to help yourself, and the Inland Revenue Department is also there to help you.

There are times when you are unable to file and pay on time you should write to the Inland Revenue Department before the deadline for filing and request permission to file your VAT return at a later date, stating the reason for your request. If approved, the late filing penalty will be waived but the late payment penalty and interest charges would still be levied. You may consider paying a fraction of the amount that is due since the late payment penalty and interest would only be calculated on the outstanding balance.

Part-Exchanges, Returned Goods, Deposits, etc.

What You Must Do If You Receive A Credit Note

If you paid too much VAT on a purchase made your supplier will issue a credit note, you must:

record this in your accounting records
the, the VAT adjustment must be recorded as Output VAT on line #255 of your Tax Return form in the month received. (You will increase you output VAT by the
amount to set off the amount claimed as input VAT.)

Payments & Refunds of VAT to or From the IRD

What Am I To Do Now That I Have Collected The VAT?

Your VAT Account must be balanced at the end of the tax period which is the calendar month. This is done by adding all output VAT collected for the period, which must include all debit notes issued and all credit notes received to determine the total output tax. The same is done to calculate the input VAT by totalling all allowable input VAT for the period along with all debit notes received and credit notes.

Now that you have obtained your output and input VAT totals for the period, to determine the VAT payable or refundable you apply the VAT equation - Output VAT minus Input VAT. If your output VAT is greater than your input VAT you are required to pay that difference to the Inland Revenue Department. However, if your input VAT is more than your output VAT then you will end up with an excess credit. This excess credit will be carried forward for three (3) months as an input VAT deduction or until it is exhausted. At the end of the three (3) months period if an excess credit still exists, you can apply to the Comptroller of Inland Revenue Department for a Refund by submitting a completed VAT Form 004.

The Inland Revenue Department will verify all refund request and issue refunds at the end of the following month if no audit is required. If your refund has been selected for an audit the refund will be paid within ten (10) days after the completion of the audit.

The Comptroller can also utilize the excess credit to clear off any other tax liability that you may have.

Refund claims under $100 will not be refunded but carried forward to succeeding Tax Period and an Input VAT deduction.

Refund cheques are deposited directly to the business bank account number provided on your Registration Form.

For Example:

Transaction	$
Output Tax	6,000.00
Debit Note Issued	200.00
Credit Note Received	300.00
Total Output Tax	6,500.00

Input tax	3,000.00
Debit Note Received	500.00
Credit Note Issued	300.00
Total Input Tax	3,800.00

VAT Equation

Output tax - Input tax = Vat Payable

$6,500.00 - $3,800.00 = $2,700.00

Therefore, VAT payable is $2,700.00

A tax credit note or debit note will be issued where a tax invoice has been changed after it has been issued.

The credit note will be issued where the tax exceeds the amount shown on the tax invoice.

The debit note will be issued where the tax is less than the amount shown on the tax invoice.

Claiming VAT On Your Purchases

What You Can & Can't Claim VAT On

Generally, you can recover VAT paid when you purchase goods or services for your business. This VAT paid is referred to as input VAT.

You can claim input VAT on your purchases regardless of whether the goods or services your business sells are taxed at the standard, reduced or zero rate.

However, you keep all related documentation such as VAT invoices, to be able to claim the input VAT. You cannot claim VAT paid on any business related purchases if your business activity is exempt from VAT.