{"id":28857,"date":"2023-11-06T21:52:10","date_gmt":"2023-11-06T21:52:10","guid":{"rendered":"https:\/\/legalblog.ie\/?p=28857"},"modified":"2024-03-31T17:55:51","modified_gmt":"2024-03-31T17:55:51","slug":"vat-capital-goods-scheme","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/","title":{"rendered":"VAT Capital Goods Scheme"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/#Capital_Goods_Scheme\" title=\"Capital Goods Scheme\">Capital Goods Scheme<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/#Applies_where_Developed\" title=\"Applies where Developed\">Applies where Developed<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/#Operation\" title=\"Operation\">Operation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/#Sale_in_Adjustment_Period\" title=\"Sale in Adjustment Period\">Sale in Adjustment Period<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/#Capital_Good_of_Purchaser\" title=\"Capital Good of Purchaser\">Capital Good of Purchaser<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/#Changes_in_Deducts\" title=\"Changes in Deducts\">Changes in Deducts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/#Letting\" title=\"Letting\">Letting<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/#Transfer_of_Business\" title=\"Transfer of Business\">Transfer of Business<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/#Inter_Group_NAMA\" title=\"Inter Group &amp; NAMA\">Inter Group &amp; NAMA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/#Tenant_Capital_Goods\" title=\"Tenant Capital Goods\">Tenant Capital Goods<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/#Receiver\" title=\"Receiver\">Receiver<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/#Developer_Sale\" title=\"Developer Sale\">Developer Sale<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/2\/#VALUE_ADDED_TAX_CONSOLIDATION_ACT\" title=\"VALUE ADDED TAX CONSOLIDATION ACT\">VALUE ADDED TAX CONSOLIDATION ACT<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/2\/#Chapter_2_Capital_goods_scheme_ss_63-64\" title=\"Chapter 2 Capital goods scheme (ss. 63-64)\">Chapter 2 Capital goods scheme (ss. 63-64)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/2\/#Interpretation_and_application\" title=\"Interpretation and application.\">Interpretation and application.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/legalblog.ie\/vat-capital-goods-scheme\/2\/#Capital_goods_scheme\" title=\"Capital goods scheme.\">Capital goods scheme.<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Capital_Goods_Scheme\"><\/span>Capital Goods Scheme<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The rules on VAT and property were fundamentally altered in 2008, by the introduction of a Capital Goods Scheme. The purpose is to ensure that VAT recovered on the acquisition or development of property, is referable to specific lifetime of use for a purpose which is subject VAT.<\/p>\n<p>The scheme seeks to allow the VAT recovery during the \u201clife\u201d of the property.\u00a0 If the property is not used for a vatable purpose throughout the entire period, then an adjustment is made to the original VAT deducted on acquisition or development.\u00a0 It requires an annual review of the use to which the property is put, from the perspective of its use in a vatable business. If it changes, an adjustment may be required.<\/p>\n<p>The adjustment applies during the \u00a0relevant period, which is generally 20 years in the case of development.\u00a0 Each period is referred to as an interval.\u00a0 In each period, the vatable use is compared with that in the initial period. An adjustment is made relative to that period.\u00a0 The adjustment relates only to that period, generally 1\/20 of the whole. The adjustment is not required, if there is no change in vatable use in that period.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Applies_where_Developed\"><\/span>Applies where Developed<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Capital Goods Scheme is applicable where capital goods (property) have been developed, acquired or refurbished and VAT was charged.\u00a0\u00a0 VAT may be charged on the acquisition price on the cost of \u00a0development.\u00a0 It is also applicable on the transfer of a business.<\/p>\n<p>When development expenditure is incurred, a capital good is created.\u00a0 Where a property is already, further development is refurbishment.\u00a0 Refurbishment has a life of 10 years.\u00a0 \u00a0A one-time refurbishment needs to be distinguished from development expenditure creating a new capital good.\u00a0 It should also be distinguished from non-capital expenditure, such as repairs.<\/p>\n<p>FA 2012 provides that development comprising refurbishment within the capital goods scheme life, does not result in a new 20-year clock starting.\u00a0 Refurbishment\u00a0 is defined as development of a previously completed building structure or engineering work.\u00a0 The refurbishment creates its own 10-year capital goods scheme life, by which the VAT incurred in the refurbishment itself is reviewed for a period of 10 years.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Operation\"><\/span>Operation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>VAT may be recovered upon the original acquisition or development, if the property is intended to be put to a vatable use.\u00a0 The position is then reviewed\u00a0 annually. The question is not simply one of vatable use or not.\u00a0 There may be part \u00a0vatable use,, where a building is used as to a proportion for a vatable use.\u00a0 If the use is greater than or less than that in respect of the original VAT claim (reflecting the original degree of VAT use or intended VAT use) an adjustment arises.<\/p>\n<p>At the outset, the assumed VAT recovery rate is calculated. After the first year, the actual VAT recovery rate is calculated. Annually thereafter, the comparison is made relative to the VAT recovered in the initial period. In each case, if there is a difference between the VAT actually recovered and assumed initial VAT recoverable, adjustment is made.<\/p>\n<p>The sum is divided by the number of intervals, generally 20, for capital development and 10 for refurbishment.\u00a0 The adjustment period ends after its natural expiry or earlier sale. The adjustment is by way of an additional input or an additional liability to VAT, as the case may be.<\/p>\n<p>If the capital good is not used during the initial period, then the sum allowed by way of recovery is based on the intended use of the property.\u00a0 This accords with general principles whereby intention at the outset, rather than actual use is sufficient. If the property is not used in the subsequent period, the proportion applicable, is that for the last year in which it was actually used.<\/p>\n<p>The later periods are\u00a0 measured by reference to the accounting year end.\u00a0 This allows the available figures to be used to measure the proportionate vatable and non-vatable uses.\u00a0If the change of use is to an exempt or partly exempt use or from an exempt use to a non-exempt use, the adjustment arises.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Sale_in_Adjustment_Period\"><\/span>Sale in Adjustment Period<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>If the property is sold during the adjustment period, the seller is deemed to use the property for a vatable purpose for the remainder \u00a0of the adjustment period.\u00a0 The effect may be to allow a refund of VAT.\u00a0 The refund is proportionate to the remainder of the interval. It \u00a0may arise where there wasn&#8217;t previously full VAT deductibility.<\/p>\n<p>The supply of old property is exempt.\u00a0 This is property that has been completed for more than 5 years and has not been developed in that time.\u00a0 Only works that adopt the property for a materially changed use constitute development in this context.<\/p>\n<p>In order to be an old building the building must have been completed more than 5 years ago and must not have been significantly developed. There may have been insignificant development only, within the last 5 years.<\/p>\n<p>The sale of a used second hand building is exempt.\u00a0 In order to be considered a second hand building, the building must<\/p>\n<ul>\n<li>have been completed in the 5 years prior to sale,<\/li>\n<li>had been occupied for at least 2 years after completion; and<\/li>\n<li>not significantly developed;<\/li>\n<li>not have been the subject of a transfer \u00a0between two unconnected persons.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Capital_Good_of_Purchaser\"><\/span>Capital Good of Purchaser<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>If \u00a0there is a sale during the adjustment period or if VAT would have been chargeable, the property then becomes a capital good for the purchaser.\u00a0 His adjustment period is 20 years commencing from acquisition in respect of the VAT incurred. A period of 20 intervals commences.<\/p>\n<p>If the property is sold within the adjustment period and the sale is exempt from VAT, there is deemed to be exempt use for the remainder of the adjustment period.\u00a0 There may be accordingly, an \u00a0adjustment for the remainder of the period.<\/p>\n<p>An option to tax prevents the above treatment.\u00a0 In effect, it allows the seller to pass on the VAT, cost that would otherwise be charged to him.\u00a0 The effect may be to increase the price in some cases.\u00a0 If the purchaser has full VAT deductibility, it should not cause an immediate cash liability.<\/p>\n<p>If the sale is opted to the tax, the purchaser acquires a new capital goods, based on the price.\u00a0 If he subsequently makes an exempt sale, there may be a greater VAT claw-back.\u00a0 In the case of a part sale, the price is adjusted between the part sold and the part retained.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Changes_in_Deducts\"><\/span>Changes in Deducts<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>If there is a major change in amount of deductibility, this period may be substituted under anti-avoidance legislation, as the new initial period in respect of which VAT adjustments are to be made in the future.\u00a0 A variance of 50% in the recovery rate is required, before this anti-avoidance applies.<\/p>\n<p>Where the option to tax is cancelled during the adjustment period, the property becomes exempt.\u00a0 The consequence is that the person is deemed to have supplied the property to himself for use for exempt purposes for the remainder of the period.\u00a0 There is a notional acquisition of the property, creating a new notional capital good.<\/p>\n<p>The person concerned, who holds the notional capital goods must pay the Revenue the equivalent of the tax referable to the exempt remainder of the period.\u00a0 The period for the new notional capital good is the number of intervals remaining in the old capital good period plus one. The landlord is not entitled to recover VAT repaid unless and until he commences to use the property for a vatable purpose.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Letting\"><\/span>Letting<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Where property is let, without an option to tax, it is potentially exempt so that the landlord\u2019s deductibility is nil.\u00a0 If it is later opted to tax, it becomes a fully vatable use.\u00a0 The landlord is deemed to supply the property to himself when he opts to tax. It is deemed to be taxable for the remainder of the adjustment period.<\/p>\n<p>The tax incurred on the notional new capital good, is the additional VAT which arises by reason of the deemed supply.\u00a0 He is deemed to pay this tax, although it has no consequences unless the position is later changed, the adjustment period for the new notional capital good is the number of periods remained in the adjustment period for the original capital good.\u00a0 VAT recovered need not be repaid unless and until the property is later used for a VAT exempt purpose.<\/p>\n<p>Where a property is let, that had been used previously for a business purpose without an option to tax, the annual adjustment or the above anti-avoidance kicks in.\u00a0 Where the anti-avoidance on a change of percentage of over 50% applies, all VAT claimed will become repayable.\u00a0 In other cases, it will continue to be payable over the remainder of the adjustment period.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Transfer_of_Business\"><\/span>Transfer of Business<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The general treatment on transfer of a business applies.\u00a0 There is deemed to be no supply, where the transfer would have been taxable, but for the treatment on transfer of a business.<\/p>\n<p>The transferor is treated as if it had made a vatable sale.\u00a0 The transferor is deemed to acquire the asset, having charged the VAT that would have arisen on the sale, but for transfer of business relief.<\/p>\n<p>The purchaser is deemed to have acquired a capital good No adjustment is required in the first year if the transferee would not have been entitled to recover all the VAT, if charged.\u00a0 It has to pay the Revenue the amount which it would not have been able to recover, if VAT had been charged.<\/p>\n<p>If the transfer would have been exempt but for the treatment, the transferor is not deemed to have used the property for an exempt purpose for the remainder of the period and is not obliged to repay VAT which he recovered on purchase.\u00a0 The purchaser takes over the capital goods obligations of the property. The seller must give the buyer the capital goods records.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Inter_Group_NAMA\"><\/span>Inter Group &amp; NAMA<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Where there is a sale between connected persons, such as in a group, the VAT on the sale has to be at least the VAT charged on acquisition. This is to avoid sales at undervalue between connected parties, which might otherwise reduce the VAT recoverable.\u00a0 The VAT charged is \u00a0reduced by the number of intervals that have passed since the original development etc.<\/p>\n<p>2013 Finance Act deals with transfers between connected parties for the purpose of the capital goods scheme adjustment.\u00a0 The connected purchaser must succeed to the vendor.\u00a0 Where the purchaser agrees to step into the shoes of the vendor, the sale is not deemed to be a supply.<\/p>\n<p>In the case of certain transfers under the NAMA Act, parties to a connected sale that would otherwise cause an adjustment to arise, may enter into an agreement that the purchaser takes over the capital good.\u00a0 The purchaser succeeds to the seller\u2019s position for the remaining intervals.<\/p>\n<p>Anti-avoidance provisions are strengthened in Finance Act 2015 in respect of the supply of uncompleted properties between unconnected persons. A connected vendor must account for an adjustment based on the difference between the VAT arising on the sale of the uncompleted property and the VAT incurred by the vendor on acquisition and development of the uncompleted property in addition to the VAT due and the sales proceeds<strong>.<\/strong> In this context, parties may not enter a written agreement by which the purchaser assumes the VAT history and capital good scheme obligations of the vendor.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Tenant_Capital_Goods\"><\/span>Tenant Capital Goods<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A tenant may carry out refurbishment and thereby create a new capital good. \u00a0A tenant who carries out refurbishment works may enter an agreement with the assignee or landlord, that the latter takes over the capital good.<\/p>\n<p>The capital goods record is to be provided.\u00a0 If this not done, the tenant may have to repay VAT claimed on the refurbishments on the basis of the adjustment period remaining.\u00a0 The same principle applies on assignment or surrender. This \u00a0is effectively treated as a exempt sale, causing a potential claw-back.<\/p>\n<p>In the case of refurbishments, the adjustment period is 10 years.\u00a0 If the capital good is completely destroyed, no further adjustments arise.\u00a0 The same applies to a refurbishment which is entirely removed in the context of assignment.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Receiver\"><\/span>Receiver<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Prior to the Finance Act 2013 the borrower in respect of whom a receiver had been appointed over assets was the accountable person.\u00a0 The receiver is now liable to register and make returns remitting VAT due.\u00a0 In strict terms, this applies to the sale of goods and not supply of services. \u00a0Finance Act 2013 extends the provision to supply of service.<\/p>\n<p>The obligation is on the receiver to file and pay the tax remains.\u00a0 The liquidator is obliged to repay sums due under the capital goods scheme adjustment.\u00a0 This is deemed a necessary disbursement out of income.<\/p>\n<p>The Finance Number 2 Act 2013 confirms that receivers or mortgagees in possession are responsible for the obligations of the capital goods owner.\u00a0 The mortgagee must provide the record within 60 days.\u00a0 The provision is extended in the number two act.\u00a0 It applies to mortgagees and receivers after 1st May 2014 but applies to receivers appointed before commencement of the finance act 2013 for the first time.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Developer_Sale\"><\/span>Developer Sale<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The Finance Act 2018 ensures that the taxation of the sale of a residential property, by\u00a0 the developer or a person connected to the developer, where the developer was entitled to deductibility, continues to apply where a receiver disposes of that property, being an asset of an accountable person<\/p>\n<p><!--nextpage--><\/p>\n<h2>VALUE ADDED TAX CONSOLIDATION ACT<\/h2>\n<h4>Chapter 2 Capital goods scheme (ss. 63-64)<\/h4>\n<p>63.<\/p>\n<h4>Interpretation and application.<\/h4>\n<p>(1)In this Chapter &#8211;<\/p>\n<p>&#8220;adjustment period&#8221;, in relation to a capital good, means the period encompassing the number of intervals as provided for in section 64(1)(a) during which adjustments of deductions are required to be made in respect of a capital good;<\/p>\n<p>&#8220;base tax amount&#8221;, in relation to a capital good, means the amount calculated by dividing the total tax incurred in relation to that capital good by the number of intervals in the adjustment period applicable to that capital good;<\/p>\n<p>&#8220;capital goods owner&#8221; means &#8211;<br \/>\n(a)unless paragraph (b) applies, a taxable person who incurs expenditure on the acquisition or development of a capital good<br \/>\n(b)a taxable person, being a flat-rate farmer who incurs expenditure to develop or acquire a capital good, not being expenditure on &#8211;<br \/>\n(i)a building or structure designed and used solely for the purposes of a farming business, or<br \/>\n(ii)fencing, drainage or reclamation of land<br \/>\nwhich has actually been put to use in such a business carried on by him or her;<\/p>\n<p>&#8220;deductible supplies or activities&#8221; has the meaning assigned to it by section 61;<\/p>\n<p>&#8220;initial interval&#8221;<br \/>\n(a)in relation to a capital good, unless paragraph (b) applies, means a period of 12 months beginning on the date when that capital good is completed<br \/>\n(b)in relation to a capital good that is supplied following completion, means, for the recipient of that supply, a period of 12 months beginning on the date of that supply;<\/p>\n<p>&#8220;initial interval proportion of deductible use&#8221;, in relation to a capital good, means the proportion that correctly reflects the extent to which a capital good is used during the initial interval for the purposes of a capital goods owner&#8217;s deductible supplies or activities;<\/p>\n<p>&#8220;interval&#8221;, in relation to a capital good, means the initial, second or subsequent interval in an adjustment period, whichever is appropriate;<\/p>\n<p>&#8220;interval deductible amount&#8221;, in relation to a capital good in respect of the second and each subsequent interval, means the amount calculated by multiplying the base tax amount in relation to that capital good by the proportion of deductible use for that capital good applicable to the relevant interval;<\/p>\n<p>&#8220;non-deductible amount&#8221;, in relation to a capital good, means the amount which is the difference between the total tax incurred in relation to that capital good and the total reviewed deductible amount in relation to that capital good;<\/p>\n<p>&#8220;proportion of deductible use&#8221;, in relation to a capital good for an interval other than the initial interval, means the proportion that correctly reflects the extent to which a capital good is used during that interval for the purposes of a capital goods owner&#8217;s deductible supplies or activities;<\/p>\n<p>&#8220;reference deduction amount&#8221;, in relation to a capital good, means the amount calculated by dividing the total reviewed deductible amount in relation to that capital good by the number of intervals in the adjustment period applicable to that capital good;<\/p>\n<p>&#8220;refurbishment&#8221; means development on a previously completed building, structure or engineering work;<\/p>\n<p>&#8220;second interval&#8221;, in relation to a capital good, means the period beginning on the day following the end of the initial interval in the adjustment period applicable to that capital good and ending on the final day of the accounting year during which the second interval begins;<\/p>\n<p>&#8220;subsequent interval&#8221;,in relation to a capital good, means each accounting year of a capital goods owner in the adjustment period applicable to that capital good, which follows the second interval;<\/p>\n<p>&#8220;total reviewed deductible amount&#8221;, in relation to a capital good, means the amount calculated by multiplying the total tax incurred in relation to that capital good by the initial interval proportion of deductible use in relation to that capital good;<\/p>\n<p>&#8220;total tax incurred&#8221;, in relation to a capital good, means &#8211;<br \/>\n(a)the amount of tax charged to a capital goods owner in respect of that owner&#8217;s acquisition or development of a capital good<br \/>\n(b)in the case of a transferee where a transfer of ownership of a capital good to which section 20(2)(c) applies &#8211;<br \/>\n(i)where such a transfer would have been a supply but for the application of section 20(2)(c) and that supply would have been exempt in accordance with section 94(2) or 95(3) or (7)(b), the total tax incurred that is required to be included in the copy of the capital good record that is required to be furnished by the transferor in accordance with section 64(10)(c), and<br \/>\n(ii)where such a transfer is not one to which subparagraph (i) applies, the amount of tax that would have been chargeable on that transfer but for the application of section 20(2)(c) and section 56<br \/>\nand<br \/>\n(c)the amount of tax that would have been chargeable but for the application of section 56 to a capital goods owner on the owner&#8217;s acquisition or development of a capital good.<\/p>\n<p>(2)This Chapter applies to capital goods &#8211;<\/p>\n<p>(a)on the supply or development of which tax was chargeable to a taxable person who carries on a business in the State, or<\/p>\n<p>(b)on the supply of which tax would have been chargeable to a taxable person who carries on a business in the State but for the application of section 20(2)(c).<\/p>\n<p>64.<\/p>\n<h4>Capital goods scheme.<\/h4>\n<p>(1)<\/p>\n<p>(a)In relation to a capital good the number of intervals in the adjustment period during which adjustments of deductions are required under this Chapter to be made is &#8211;<\/p>\n<p>(i)in the case of refurbishment, 10 intervals,<\/p>\n<p>(ii)in the case of a capital good to which subsection (5)(a) or (b) applies, the number of full intervals remaining in the adjustment period applicable to that capital good plus one as required to be calculated in accordance with the formula set out in subsection (6)(b), and<\/p>\n<p>(iii)in all other cases, 20 intervals.<\/p>\n<p>(b)Where a capital goods owner supplies or transfers by means of a transfer to which section 20(2)(c) applies a capital good during the adjustment period, then the adjustment period for that capital good for that owner shall end on the date of that supply or transfer.<\/p>\n<p>(2)<\/p>\n<p>(a)Where the initial interval proportion of deductible use in relation to a capital good differs from the proportion of the total tax incurred in relation to that capital good which was deductible by that owner in accordance with Chapter 1, then that owner shall, at the end of the initial interval, calculate an amount in accordance with the formula &#8211;<\/p>\n<p>A &#8211; B<\/p>\n<p>where &#8211;<\/p>\n<p>Ais the amount of the total tax incurred in relation to that capital good which was deductible by that owner in accordance with Chapter 1, and<\/p>\n<p>Bis the total reviewed deductible amount in relation to that capital good.<\/p>\n<p>(b)Where in accordance with paragraph (a) &#8211;<\/p>\n<p>(i)A is greater than B, then the amount calculated in accordance with the formula set out in paragraph (a) shall be payable by that owner as if it were tax due in accordance with Chapter 3 of Part 9 for the taxable period immediately following the end of the initial interval, or<\/p>\n<p>(ii)B is greater than A, then that owner is entitled to increase the amount of tax deductible for the purposes of Chapter 1 by the amount calculated in accordance with paragraph (a) for the taxable period immediately following the end of the initial interval.<\/p>\n<p>(c)Where a capital good is not used during the initial interval, then the initial interval proportion of deductible use is the proportion of the total tax incurred that is deductible by the capital goods owner in accordance with Chapter 1.<\/p>\n<p>(3)<\/p>\n<p>(a)Subject to subsection (4)(e), where in respect of an interval (other than the initial interval) the proportion of deductible use for that interval in relation to a capital good differs from the initial interval proportion of deductible use in relation to the capital good, then the capital goods owner shall, at the end of that interval, calculate an amount in accordance with the formula &#8211;<\/p>\n<p>C &#8211; D<\/p>\n<p>where &#8211;<\/p>\n<p>Cis the reference deduction amount in relation to that capital good, and<\/p>\n<p>Dis the interval deductible amount in relation to that capital good.<\/p>\n<p>(b)Where in accordance with paragraph (a) &#8211;<\/p>\n<p>(i)C is greater than D, then the amount calculated in accordance with the formula set out in paragraph (a) shall be payable by that owner as if it were tax due in accordance with Chapter 3 of Part 9 for the taxable period immediately following the end of that interval, or<\/p>\n<p>(ii)D is greater than C, then that owner is entitled to increase the amount of tax deductible for the purposes of Chapter 1 by the amount calculated in accordance with the formula set out in paragraph (a) for the taxable period immediately following the end of that interval.<\/p>\n<p>(c)Where for the second or any subsequent interval, a capital good is not used during that interval, the proportion of deductible use in respect of that capital good for that interval shall be the proportion of deductible use for the previous interval.<\/p>\n<p>(4)<\/p>\n<p>(a)Where in respect of a capital good for an interval (other than the initial interval) the proportion of deductible use expressed as a percentage differs by more than 50 percentage points from the initial interval proportion of deductible use expressed as a percentage, then the capital goods owner shall at the end of that interval calculate an amount in accordance with the formula &#8211;<\/p>\n<p>(C &#8211; D) \u00d7 N<\/p>\n<p>where &#8211;<\/p>\n<p>Cis the reference deduction amount in relation to that capital good,<\/p>\n<p>Dis the interval deductible amount in relation to that capital good, and<\/p>\n<p>Nis the number of full intervals remaining in the adjustment period at the end of that interval plus one.<\/p>\n<p>(b)Where in accordance with paragraph (a) &#8211;<\/p>\n<p>(i)C is greater than D, then the amount calculated in accordance with the formula set out in paragraph (a) shall be payable by that owner as if it were tax due in accordance with Chapter 3 of Part 9 for the taxable period immediately following the end of that interval, or<\/p>\n<p>(ii)D is greater than C, then that owner is entitled to increase the amount of tax deductible for the purposes of Chapter 1 by the amount calculated in accordance with the formula set out in paragraph (a) for the taxable period immediately following the end of that interval.<\/p>\n<p>(c)Paragraph (a) shall not apply to a capital good or part thereof that has been subject to subsection (5)(a) or (b) during the interval to which paragraph (a) applies.<\/p>\n<p>(d)Where a capital goods owner is obliged to carry out a calculation referred to in paragraph (a) in respect of a capital good, then, for the purposes of the remaining intervals in the adjustment period, the proportion of deductible use in relation to that capital good for the interval in respect of which the calculation is required to be made shall be treated as if it were the initial interval proportion of deductible use in relation to that capital good and, until a further calculation is required under paragraph (a), all other definition amounts shall be calculated accordingly.<\/p>\n<p>(e)Where the other provisions of this subsection apply to an interval, then subsection (3) does not apply to the interval.<\/p>\n<p>(5)<\/p>\n<p>(a)Where a capital goods owner who is a landlord in respect of all or part of a capital good terminates his or her landlord&#8217;s option to tax in accordance with section 97(1) in respect of any letting of that capital good, then &#8211;<\/p>\n<p>(i)that owner is deemed, for the purposes of this Chapter, to have supplied and simultaneously acquired the capital good to which that letting relates,<\/p>\n<p>(ii)that supply shall be deemed to be a supply on which tax is not chargeable and no option to tax that supply in accordance with section 94(5) shall be permitted on that supply, and<\/p>\n<p>(iii)the capital good acquired shall be treated as a capital good for the purposes of this Chapter and the amount calculated in accordance with subsection (6)(b) on that supply shall be treated as the total tax incurred in relation to that capital good.<\/p>\n<p>(b)Where in respect of a letting of a capital good that is not subject to a landlord&#8217;s option to tax in accordance with section 97(1), a landlord subsequently exercises a landlord&#8217;s option to tax in respect of a letting of that capital good, then &#8211;<\/p>\n<p>(i)that landlord is deemed, for the purposes of this Chapter, to have supplied and simultaneously acquired that capital good to which that letting relates,<\/p>\n<p>(ii)that supply shall be deemed to be a supply on which tax is chargeable, and<\/p>\n<p>(iii)the capital good acquired shall be treated as a capital good for the purposes of this Chapter, and &#8211;<\/p>\n<p>(I)the amount calculated in accordance with subsection (6)(a) shall be treated as the total tax incurred in relation to that capital good,<\/p>\n<p>(II)the total tax incurred shall be deemed to have been deducted in accordance with Chapter 1 at the time of that supply.<\/p>\n<p>(6)<\/p>\n<p>(a)<\/p>\n<p>(i)Where &#8211;<\/p>\n<p>(I)a capital goods owner supplies a capital good or transfers a capital good, being a transfer to which section 20(2)(c) applies (other than a transfer to which subsection (10)(c) applies), during the adjustment period in relation to that capital good,<\/p>\n<p>(II)tax is chargeable on that supply, or tax would have been chargeable on that transfer but for the application of section 20(2)(c), and<\/p>\n<p>(III)the non-deductible amount in relation to that capital good for that owner is greater than zero or, in the case of a supply or transfer during the initial interval, that owner was not entitled to deduct all of the total tax incurred in accordance with Chapter 1,<\/p>\n<p>then that owner is entitled to increase the amount of tax deductible by that owner for the purposes of Chapter 1 for the taxable period in which the supply or transfer occurs by an amount (in this paragraph referred to as the &#8220;relevant amount&#8221;) calculated in accordance with subparagraph (II).<\/p>\n<p>(ii)The relevant amount shall be calculated in accordance with the formula &#8211;<\/p>\n<p>&nbsp;<\/p>\n<p>where &#8211;<\/p>\n<p>Eis the non-deductible amount in relation to that capital good or, in the case of a supply before the end of the initial interval, the amount of the total tax incurred in relation to that capital good which was not deductible by that owner in accordance with Chapter 1,<\/p>\n<p>Nis the number of full intervals remaining in the adjustment period in relation to that capital good at the time of supply plus one,<\/p>\n<p>Tis the total number of intervals in the adjustment period in relation to that capital good.<\/p>\n<p>(b)<\/p>\n<p>(i)Where &#8211;<\/p>\n<p>(I)a capital goods owner supplies a capital good during the adjustment period applicable to that capital good,<\/p>\n<p>(II)tax is not chargeable on that supply, and<\/p>\n<p>(III)either &#8211;<\/p>\n<p>(A)the total reviewed deductible amount in relation to that capital good is greater than zero, or<\/p>\n<p>(B)in the case of a supply before the end of the initial interval where the amount of the total tax incurred in relation to that capital good which was deductible by that owner in accordance with Chapter 1 is greater than zero,<\/p>\n<p>then that owner shall calculate, in accordance with subparagraph (ii), an amount (in this paragraph referred to as the &#8220;relevant amount&#8221;) which shall be payable as if it were tax due in accordance with Chapter 3 of Part 9 for the taxable period in which the supply occurs.<\/p>\n<p>(ii)The relevant amount shall be calculated in accordance with the formula &#8211;<\/p>\n<p>&nbsp;<\/p>\n<p>where &#8211;<\/p>\n<p>Bis the total reviewed deductible amount in relation to that capital good or, in the case of a supply to which subparagraph (i)(III)(B) applies, the amount of the total tax incurred in relation to that capital good which that owner claimed as a deduction in accordance with Chapter 1,<\/p>\n<p>Nis the number of full intervals remaining in the adjustment period in relation to that capital good at the time of supply plus one, and<\/p>\n<p>Tis the total number of intervals in the adjustment period in relation to that capital good.<\/p>\n<p>(c)Where a capital goods owner supplies or transfers, being a transfer to which section 20(2)(c) applies, part of a capital good during the adjustment period, then, for the remainder of the adjustment period applicable to that capital good &#8211;<\/p>\n<p>(i)the total tax incurred,<\/p>\n<p>(ii)the total reviewed deductible amount, and<\/p>\n<p>(iii)all other definition amounts,<\/p>\n<p>in relation to the remainder of that capital good for that owner shall be adjusted accordingly on a fair and reasonable basis.<\/p>\n<p>(7)<\/p>\n<p>(a)Where a tenant who has an interest in immovable goods (other than a freehold equivalent interest) and who is the capital goods owner in respect of a refurbishment of those goods assigns or surrenders the interest during the adjustment period applicable to the refurbishment, then the tenant &#8211;<\/p>\n<p>(i)shall, in accordance with the formula set out in subsection (6)(b), calculate an amount in respect of the refurbishment, and<\/p>\n<p>(ii)shall pay the amount as if it were tax due (as provided by Chapter 3 of Part 9) for the taxable period in which the assignment or surrender occurs.<\/p>\n<p>(b)Paragraph (a) shall not apply where &#8211;<\/p>\n<p>(i)either &#8211;<\/p>\n<p>(I)the total reviewed deductible amount in relation to that capital good is equal to the total tax incurred in relation to that capital good, or<\/p>\n<p>(II)in relation to an assignment or surrender that occurs prior to the end of the initial interval in relation to that capital good, the tenant was entitled to deduct all of the total tax incurred in accordance with Chapter 1 in relation to that capital good,<\/p>\n<p>(ii)the tenant enters into a written agreement with the person to whom the interest is assigned or surrendered, to the effect that that person shall be responsible for all obligations under this Chapter in relation to the capital good referred to in paragraph (a) from the date of the assignment or surrender of the interest referred to in paragraph (a), as if &#8211;<\/p>\n<p>(I)the total tax incurred and the amount deducted by that tenant in relation to that capital good were the total tax incurred and the amount deducted by the person to whom the interest is assigned or surrendered, and<\/p>\n<p>(II)any adjustments required to be made under this Chapter by the tenant were made,<\/p>\n<p>and<\/p>\n<p>(iii)the tenant issues a copy of the capital good record in respect of the capital good referred to in paragraph (a) to the person to whom the interest is being assigned or surrendered.<\/p>\n<p>(c)Where paragraph (b) applies, the person to whom the interest is assigned or surrendered &#8211;<\/p>\n<p>(i)shall be responsible for the obligations referred to in paragraph (b)(ii), and<\/p>\n<p>(ii)shall use the information in the copy of the capital good record issued by the tenant in accordance with paragraph (b)(iii) for the purposes of calculating any tax chargeable or deductible in accordance with this Chapter in respect of that capital good by that person from the date of the assignment or surrender of the interest referred to in paragraph (a).<\/p>\n<p>(d)Where the capital good is one to which subsection (11) applies, paragraphs (a), (b) and (c) shall not apply.<\/p>\n<p>(8)<\/p>\n<p>(a)Paragraph (c) applies where &#8211;<\/p>\n<p>(i)either &#8211;<\/p>\n<p>(I)a capital goods owner supplies a capital good during the adjustment period applicable to that capital good and tax is chargeable on that supply, or<\/p>\n<p>(II)a capital goods owner transfers (other than a transfer to which subsection (10)(c) applies) a capital good during the adjustment period applicable to that capital good and tax would have been chargeable on that transfer but for the application of section 20(2)(c),<\/p>\n<p>(ii)at the time of that supply or transfer, that owner and the person to whom the capital good is supplied or transferred are connected within the meaning of section 97, and<\/p>\n<p>(iii)the amount of tax &#8211;<\/p>\n<p>(I)chargeable on the supply of that capital good,<\/p>\n<p>(II)that would have been chargeable on the transfer of that capital good but for the application of section 20(2)(c), or<\/p>\n<p>(III)that would have been chargeable on the supply but for the application of section 56,<\/p>\n<p>is less than the amount (in this subsection referred to as the &#8220;adjustment amount&#8221;) calculated in accordance with paragraph (b).<\/p>\n<p>(b)The adjustment amount shall be calculated in accordance with the formula &#8211;<\/p>\n<p>&nbsp;<\/p>\n<p>where &#8211;<\/p>\n<p>His the total tax incurred in relation to that capital good for the capital goods owner making that supply or transfer,<\/p>\n<p>Nis the number of full intervals remaining in the adjustment period in relation to that capital good plus one, and<\/p>\n<p>Tis the total number of intervals in the adjustment period in relation to that capital good.<\/p>\n<p>(c)The capital goods owner shall calculate an amount, which shall be payable by that owner as if it were tax due in accordance with Chapter 3 of Part 9 for the taxable period in which the supply or transfer occurs, in accordance with the formula &#8211;<\/p>\n<p>I &#8211; J<\/p>\n<p>where &#8211;<\/p>\n<p>Iis the adjustment amount, and<\/p>\n<p>Jis the amount of tax chargeable on the supply of that capital good, or the amount of tax that would have been chargeable on the transfer of that capital good but for the application of section 20(2)(c), or the amount of tax that would have been chargeable on the supply but for the application of section 56.<\/p>\n<p>(8A)<\/p>\n<p>(a)Paragraph (b) applies where &#8211;<\/p>\n<p>(i)either &#8211;<\/p>\n<p>(I)a capital goods owner supplies a capital good which has not been completed and tax is chargeable on that supply, or<\/p>\n<p>(II)a capital goods owner transfers (other than a transfer to which subsection (10)(c) applies) a capital good which has not been completed and tax would have been chargeable on that transfer but for the application of section 20(2)(c),<\/p>\n<p>(ii)at the time of that supply or transfer, that owner and the person to whom the capital good is supplied or transferred are connected within the meaning of section 97, and<\/p>\n<p>(iii)the amount of tax &#8211;<\/p>\n<p>(I)chargeable on the supply of that capital good,<\/p>\n<p>(II)that would have been chargeable on the transfer of that capital good but for the application of section 20(2)(c), or<\/p>\n<p>(III)that would have been chargeable on the supply but for the application of section 56,<\/p>\n<p>is less than the total tax incurred in relation to that capital good by the capital goods owner making that supply or transfer.<\/p>\n<p>(b)The capital goods owner shall calculate an amount, which shall be payable by that owner as if it were tax due in accordance with Chapter 3 of Part 9 for the taxable period in which the supply or transfer occurs, in accordance with the formula &#8211;<\/p>\n<p>K &#8211; L<\/p>\n<p>where &#8211;<\/p>\n<p>Kis the total tax incurred in relation to that capital good by the capital goods owner making that supply or transfer, and<\/p>\n<p>Lis the amount of tax chargeable on the supply of that capital good, or the amount of tax that would have been chargeable on the transfer of that capital good but for the application of section 20(2)(c), or the amount of tax that would have been chargeable on the supply but for the application of section 56.<\/p>\n<p>(9)<\/p>\n<p>(a)In this subsection &#8211;<\/p>\n<p>&#8220;connected supply&#8221; means a supply or transfer of a capital good which is a supply or transfer on which a seller would, but for the application of this subsection, be obliged to calculate an amount of tax due in accordance with subsection (8);<\/p>\n<p>&#8220;purchaser&#8221; means the person to whom the supply or transfer referred to in subsection (8) is made;<\/p>\n<p>&#8220;seller&#8221; means the capital goods owner referred to in subsection (8) who makes the supply or transfer of the capital good referred to in that subsection.<\/p>\n<p>(b)Subsection (8) shall not apply where &#8211;<\/p>\n<p>(i)a connected supply occurs and the seller enters into a written agreement with the purchaser to the effect that the purchaser shall be responsible for all obligations under this Chapter in relation to the capital good from the date of the supply or transfer of that capital good, as if &#8211;<\/p>\n<p>(I)the purchaser had acquired or developed the capital good at the time it was acquired or developed by the seller,<\/p>\n<p>(II)the total tax incurred and the amount deducted by that seller in relation to that capital good were the total tax incurred and the amount deducted by the purchaser, and<\/p>\n<p>(III)any adjustments made in accordance with this Chapter by the seller were made by the purchaser,<\/p>\n<p>and<\/p>\n<p>(ii)the seller issues a copy of the capital good record in respect of the capital good referred to in subparagraph (i) to the purchaser.<\/p>\n<p>(c)Where paragraph (b) applies &#8211;<\/p>\n<p>(i)the purchaser shall:<\/p>\n<p>(I)be responsible for the obligations referred to in paragraph (b)(i), and<\/p>\n<p>(II)use the information in the copy of the capital good record issued by the seller in accordance with paragraph (b)(ii) for the purposes of calculating any tax chargeable or deductible in accordance with this Chapter in respect of that capital good by that purchaser from the date on which the supply or transfer referred to in paragraph (b)(i) occurs,<\/p>\n<p>and<\/p>\n<p>(ii)the connected supply shall be deemed not to be a supply for the purposes of this Act.<\/p>\n<p>(10)<\/p>\n<p>(a)Where a capital goods owner acquires a capital good &#8211;<\/p>\n<p>(i)by way of a transfer, being a transfer to which section 20(2)(c) applies other than a transfer to which paragraph (c) applies, on which tax would have been chargeable but for the application of section 20(2)(c), or<\/p>\n<p>(ii)on the supply or development of which tax was chargeable in accordance with section 56,<\/p>\n<p>then, for the purposes of this Chapter, that capital goods owner is deemed to have claimed a deduction in accordance with Chapter 1 of the tax that would have been chargeable &#8211;<\/p>\n<p>(I)on the transfer of that capital good but for the application of section 20(2)(c), less any amount accounted for by that owner in respect of that transfer in accordance with paragraph (b), and<\/p>\n<p>(II)on the supply or development of that capital good but for the application of section 56.<\/p>\n<p>(b)<\/p>\n<p>(i)Where &#8211;<\/p>\n<p>(I)a transfer of ownership of a capital good (in this paragraph referred to as the &#8220;relevant capital good&#8221;) occurs, being a transfer to which section 20(2)(c) applies, but excluding a transfer to which paragraph (c) applies, and<\/p>\n<p>(II)the transferee would not have been entitled to deduct all of the tax that would have been chargeable on that transfer but for the application of section 20(2)(c),<\/p>\n<p>then that transferee shall calculate an amount (in this paragraph referred to as the &#8220;relevant amount&#8221;) in accordance with subparagraph (ii).<\/p>\n<p>(ii)The relevant amount shall be calculated in accordance with the formula &#8211;<\/p>\n<p>F &#8211; G<\/p>\n<p>where &#8211;<\/p>\n<p>Fis the amount of tax that would have been chargeable but for the application of section 20(2)(c), and<\/p>\n<p>Gis the amount of that tax that would have been deductible in accordance with Chapter 1 by that transferee if section 20(2)(c) had not applied to that transfer.<\/p>\n<p>(iii)The relevant amount shall be payable by that transferee as if it were tax due in accordance with Chapter 3 of Part 9 for the taxable period in which the transfer occurs.<\/p>\n<p>(iv)For the purposes of this Chapter, the relevant amount shall be deemed to be the amount of the total tax incurred in relation to the relevant capital good that the transferee was not entitled to deduct in accordance with Chapter 1.<\/p>\n<p>(c)Where a capital goods owner makes a transfer of a capital good to which this paragraph applies &#8211;<\/p>\n<p>(i)the transferor shall issue a copy of the capital good record to the transferee,<\/p>\n<p>(ii)the transferee becomes the successor to the capital goods owner who transferred the capital good and is responsible for all obligations of that owner under this Chapter from the date of the transfer of that good, as if &#8211;<\/p>\n<p>(I)the total tax incurred and the amount deducted by the transferor in relation to the good were the total tax incurred and the amount deducted by the transferee, and<\/p>\n<p>(II)any adjustments required to be made under this Chapter by the transferor had been made,<\/p>\n<p>and<\/p>\n<p>(iii)the transferee as successor shall use the information in the copy of the capital good record issued by the transferor in accordance with subparagraph (i) for the purpose of calculating the tax chargeable or deductible by the successor in accordance with this Chapter for the remainder of the adjustment period applicable to that good as from the date of its transfer.<\/p>\n<p>(d)Paragraph (c) applies to a transfer of a capital good if &#8211;<\/p>\n<p>(i)the transfer is of the kind referred to in section 20(2)(c), and<\/p>\n<p>(ii)but for the application of section 20(2), that transfer would be a supply &#8211;<\/p>\n<p>(I)that is exempt in accordance with section 94(2) or 95(3) or (7)(b), or<\/p>\n<p>(II)in respect of which tax is chargeable in accordance with section 95(7)(a).<\/p>\n<p>(11)Where a capital good is destroyed during the adjustment period in relation to that capital good, then no further adjustment under this Chapter shall be made by the capital goods owner in respect of any remaining intervals in the adjustment period in relation to that capital good.<\/p>\n<p>(12)A capital goods owner shall create and maintain a record (in this Chapter referred to as a &#8220;capital good record&#8221;) in respect of each capital good and that record shall contain sufficient information to determine any adjustments in respect of that capital good required in accordance with this Chapter.<\/p>\n<p>(12A)<\/p>\n<p>(a)In this subsection &#8211;<\/p>\n<p>&#8216;end date&#8217; means the date on which either the mortgagee ceases to have possession or the receiver&#8217;s appointment ends;<\/p>\n<p>&#8216;mortgagee&#8217; includes any person having the benefit of a charge or lien or any person deriving title to the mortgage under the original mortgagee;<\/p>\n<p>&#8216;start date&#8217; means &#8211;<\/p>\n<p>(i)where subparagraph (i) or (ii) of paragraph (b) applies, the date on which either the mortgagee takes possession or the receiver is appointed, or<\/p>\n<p>(ii)where subparagraph (i) or (ii) of paragraph (ba) applies, 1 May 2014.<\/p>\n<p>(b)Where a capital good is held as security or is subject to a charge or lien and, on or after 27 March 2013, either &#8211;<\/p>\n<p>(i)a mortgagee takes possession, or<\/p>\n<p>(ii)a receiver is appointed by or on the application of a mortgagee or under section 147 of the National Asset Management Agency Act 2009 or by any other means,<\/p>\n<p>then the capital goods owner (in this subsection referred to as the &#8216;defaulter&#8217;) shall furnish a copy of the capital goods record to that mortgagee or that receiver and on and from the start date, but subject to the subsequent provisions of this subsection, that mortgagee or that receiver shall be treated for the purposes of this Chapter as if that mortgagee or that receiver were the capital goods owner.<\/p>\n<p>(ba)Where a capital good is held as security or is subject to a charge or lien and, before 27 March 2013, either &#8211;<\/p>\n<p>(i)a mortgagee took possession, or<\/p>\n<p>(ii)a receiver was appointed by or on the application of a mortgagee or under section 147 of the National Asset Management Agency Act 2009 or by any other means,<\/p>\n<p>then the defaulter shall, within 60 days after the date of the passing of the Finance (No. 2) Act 2013 furnish a copy of the capital goods record to that mortgagee or that receiver and on and from the start date, but subject to the subsequent provisions of this subsection, that mortgagee or that receiver shall be treated for the purposes of this Chapter as if that mortgagee or that receiver were the capital goods owner.<\/p>\n<p>(c)Where paragraph (b) or (ba) applies the mortgagee or the receiver shall be responsible for all obligations of that defaulter under this Chapter as if &#8211;<\/p>\n<p>(i)the capital good were acquired or developed by that mortgagee or that receiver at the time it was acquired or developed by the defaulter,<\/p>\n<p>(ii)the total tax incurred and the amount deducted by the defaulter in relation to the good were the total tax incurred and the amount deducted by that mortgagee or that receiver, and<\/p>\n<p>(iii)any adjustments required to be made under this Chapter by the defaulter had been made,<\/p>\n<p>and that mortgagee or that receiver shall use the information in the copy of the capital good record issued by the defaulter, in accordance with paragraph (b) or (ba), as appropriate, for the purposes of calculating any tax payable or deductible by that mortgagee or that receiver in accordance with this Chapter and section 76(2) for the remainder of the adjustment period applicable to that capital good.<\/p>\n<p>(d)Where paragraph (c) applies and if &#8211;<\/p>\n<p>(i)the mortgagee ceases to have possession (other than where paragraph (h) applies or on a disposal of the capital good), or<\/p>\n<p>(ii)the receiver&#8217;s appointment ends (other than where paragraph (h) applies) and the capital good has not been disposed of by the receiver,<\/p>\n<p>then that mortgagee or that receiver shall furnish a copy of the capital goods record to the defaulter and from the end date the defaulter shall be treated for the purposes of this Chapter as if that defaulter were the capital goods owner.<\/p>\n<p>(e)Where paragraph (d) applies the defaulter shall be responsible for all obligations of that mortgagee or that receiver under this Chapter as if &#8211;<\/p>\n<p>(i)the capital good were acquired or developed by the defaulter at the time it was deemed, in accordance with paragraph (c)(i), to have been acquired by the mortgagee or the receiver,<\/p>\n<p>(ii)the total tax deemed to be incurred and the amount deemed to be deducted by that mortgagee or that receiver, in accordance with paragraph (c)(ii), in relation to the good were the total tax incurred and the amount deducted by the defaulter, and<\/p>\n<p>(iii)any adjustments required to be made under this Chapter by that mortgagee or that receiver had been made,<\/p>\n<p>and the defaulter shall use the information in the copy of the capital good record issued by the mortgagee or the receiver, in accordance with paragraph (d), for the purposes of calculating any tax payable or deductible by that defaulter in accordance with this Chapter for the remainder of the adjustment period applicable to that capital good.<\/p>\n<p>(f)Where an amount of tax is payable in respect of an interval in accordance with subsection (2)(b)(i), (3)(b)(i) or (4)(b)(i), and where the start date or the end date or both occur during that interval, the amount of that tax that shall be payable by the mortgagee or the receiver shall be calculated in accordance with the following formula &#8211;<\/p>\n<p>&nbsp;<\/p>\n<p>where &#8211;<\/p>\n<p>Jis the amount of the tax payable in accordance with subsection (2)(b)(i), (3)(b)(i) or (4)(b)(i),<\/p>\n<p>Kis the number of days during the interval in which the mortgagee has possession or the receiver has been appointed,<\/p>\n<p>Lis the number of days in the interval,<\/p>\n<p>and the defaulter shall pay the balance (if any).<\/p>\n<p>(g)Where there is an increase in the amount of tax deductible in respect of an interval in accordance with subsection (2)(b)(ii), (3)(b)(ii) or (4)(b)(ii), and where the start date or the end date or both occur during that interval, the amount of that increase in deductibility to which the mortgagee or the receiver shall be entitled shall be calculated using the following formula &#8211;<\/p>\n<p>&nbsp;<\/p>\n<p>where &#8211;<\/p>\n<p>Mis the amount of the increase in deductibility in accordance with subsection (2)(b)(ii), (3)(b)(ii) or (4)(b)(ii),<\/p>\n<p>Kis the number of days during the interval in which the mortgagee has possession or the receiver has been appointed,<\/p>\n<p>Lis the number of days in the interval,<\/p>\n<p>and the defaulter shall be entitled to the balance (if any).<\/p>\n<p>(h)Where paragraph (c) applies and if &#8211;<\/p>\n<p>(i)a mortgagee ceases to have possession and another mortgagee takes possession,<\/p>\n<p>(ii)a mortgagee ceases to have possession and a receiver is appointed,<\/p>\n<p>(iii)a receiver&#8217;s appointment ends and a mortgagee takes possession, or<\/p>\n<p>(iv)a receiver&#8217;s appointment ends and another receiver is appointed,<\/p>\n<p>then, in each case, the person who ceases to have possession or whose appointment ends shall furnish a copy of the capital goods record to the mortgagee who takes possession or the receiver who is appointed and, from the start date, that mortgagee or that receiver shall be treated for the purposes of this Chapter as if that mortgagee or that receiver were the capital goods owner and shall be responsible for the obligations of the preceding mortgagee or receiver in accordance with paragraphs (c) and (d).<\/p>\n<p>(13)The Revenue Commissioners may make regulations necessary for the purposes of the operation of this Chapter, in particular in relation to the duration of a subsequent interval where the accounting year of a capital goods owner changes.<\/p>\n<p>&nbsp;<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-28857\" data-postid=\"28857\" class=\"themify_builder_content themify_builder_content-28857 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Capital Goods Scheme The rules on VAT and property were fundamentally altered in 2008, by the introduction of a Capital Goods Scheme. The purpose is to ensure that VAT recovered on the acquisition or development of property, is referable to specific lifetime of use for a purpose which is subject VAT. The scheme seeks to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[390],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/28857"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=28857"}],"version-history":[{"count":16,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/28857\/revisions"}],"predecessor-version":[{"id":34457,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/28857\/revisions\/34457"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=28857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=28857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=28857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}