21FTreatment on disposal

1. This section applies when a registered person—

2. acquires goods or services in relation to which they do not have a full deduction, taking into account any adjustments made to input tax in adjustment periods after acquisition; and
3. subsequently disposes, or is treated as disposing, of the goods or services in the course or furtherance of a taxable activity.

4. Repealed

5. Repealed

6. Subject to subsection (6), the person must make a final adjustment of an amount calculated using the formula—

   $tax\; fraction\; \times \; consideration\; \times \; (1\; -\; previous\; use).$

   Where:

7. For the purposes of the formula in subsection (4),—

8. tax fraction has the meaning given in section 2(1), unless subsection (7) applies to the disposal:
9. consideration is the amount of consideration received, or treated as received, for the supply:
10. previous use is the percentage intended use or the previous actual use in the period before the period in which the disposal occurs.

11. If either of the requirements in subsection (6B) are met, the final adjustment given by subsection (4) must not exceed—

12. for a disposal that the person acquired as a zero-rated supply under section 11(1)(m) or (mb), the amount of output tax that is accounted for by the person under section 20(3J)(a)(iii), taking into account any later adjustments made under the apportionment rules in sections 21 to 21H; or
13. for a disposal to which paragraph (a) does not apply, the amount that, when added to any deduction already claimed, produces a total amount equal to the amount of the full input tax deduction on acquisition referred to in section 21D(2).

14. For the purposes of subsection (6), the requirements are either—

15. the disposal is of land that the person uses in the course or furtherance of a taxable activity that is—
    1. the main activity of the person out of all activities undertaken by the person that involve the supply of goods and services to another person for consideration, including activities that are not taxable activities (for example, making exempt supplies); and
    2. developing land, dividing land into lots, dealing in land, or erecting buildings; or
16. section 5(16B) applies.

17. In the formula in subsection (4), on the disposal of the goods or services, if the supply is charged at the rate of 0%, the item tax fraction is treated as 15%.