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HMRC internal manual

VAT Fraud

Basic interventions: input tax interventions: the supplies have not been paid for

Section 26A of the VAT Act 1994 specifies that a taxable person ceases to be entitled to credit for input tax where ‘the consideration for the supply to which that input tax relates, or any part of it, is unpaid at the end of the period of 6 months following the relevant date’ (the ‘relevant date’ being the date of the supply or, if later, the date on which the consideration for the supply became payable).

The requirement to repay input tax in these circumstances, and the method for doing so, is detailed in Regulations 172F to 172H of the VAT Regulations 1995 (SI 1995/2518).

General guidance on these provisions can be found in VBDR5000. Guidance on action to take can be found in MTOG3950 of the Missing Trader Intra-Community Fraud Specialist Investigations Operational Guidance.