Value Added Tax Act 1994 section 90

Failure of resolution under Provisional Collection of Taxes Act 1968

Section 90 deals with what happens when a provisional VAT rate increase introduced by parliamentary resolution fails or lapses, and how overpaid VAT is to be repaid or recalculated.

• Where VAT has been paid at a higher rate set by a provisional resolution and that resolution subsequently fails, the taxpayer is entitled to a repayment equal to the difference between the VAT paid at the resolution rate and the VAT that would have been due at the restored lower rate.
• Where VAT has become chargeable at the resolution rate but has not yet been paid when the resolution fails, the VAT due reverts to the lower rate but is calculated on the same value as would have applied under the resolution rate.
• In both cases, the value used for calculating the VAT is determined under section 19(2) of the VAT Act 1994, which sets out how the value of a supply of goods or services is established.
• Any VAT that has been repaid (or would be repayable) because of a failed resolution cannot also be claimed as input tax credit or included in any VAT refund under sections 25, 33, 33A, 33B, 33C or 35 of the Act.