78BAdjustments to tax payable for persons furnishing returns following change in rate of tax

1. Where there is a change in the rate of tax imposed by section 8,—

2. any payments that are made or received by a registered person on or after the date on which the new rate comes into force, to the extent that—shall be deemed, notwithstanding any other provision of this Act, to be consideration for a supply made or received by that registered person on or after the date on which the new rate of tax comes into force, and the amount of any input tax or output tax in respect of any such supply shall accordingly be determined on the basis of the new rate of tax; but
   1. any such payment is made or received in respect of any qualifying supply referred to in subsection (2A)(a) by a registered person who, as at that date, is required to account for tax payable on a payments basis; or
   2. any such payment is made in respect of any qualifying supply of secondhand goods referred to in subsection (2A)(b) by a registered person who, as at that date, is required to account for tax payable on an invoice basis; or
   3. any such payment is made in respect of any qualifying supply referred to in subsection (2A)(aa) by a registered person who, as at that date, is required to account for tax payable on a hybrid basis,—
3. the amount of tax payable under section 20 by any registered person referred to in paragraph (a) who makes or receives a qualifying supply shall be adjusted by an amount calculated in accordance with this section.

4. Where subsection (1)(b) requires an adjustment to be made of the amount of tax payable by a registered person,—

5. the calculation of the adjustment shall be recorded in a form prescribed by the Commissioner; and

7. For the purposes of this section, the term qualifying supply means—

8. in relation to a person who, as at the date on which the new rate of tax comes into force, is required to account for tax payable on a payments basis,—
   1. any taxable supply made by the registered person; or
   2. any taxable supply made to the registered person; or
   3. any supply made to the registered person that is a supply of secondhand goods to which section 3A(1)(c) of the input tax definition applies; or
   4. any supply made by the registered person that is a specified supply within the meaning of section 86; and
9. in relation to a person who, as at the date on which the new rate of tax comes into force, is required to account for tax payable on a hybrid basis,—
   1. any supply that is made by the registered person as a private training establishment granted registration by the Qualifications Authority under section 387 of the Education and Training Act 2020 and for which consideration is held in trust on the day before that date, if the registered person includes such supplies in the form referred to in subsection (2); or
   2. any taxable supply made to the registered person; or
   3. any supply made to the registered person that is a supply of secondhand goods to which section 3A(1)(c) of the input tax definition applies; and
10. in relation to a person who, as at the date on which the new rate of tax comes into force, is required to account for tax payable on an invoice basis,—
    1. any supply made by the registered person as a private training establishment granted registration by the Qualifications Authority under section 387 of the Education and Training Act 2020 and for which consideration is held in trust on the day before that date, if the registered person includes such supplies in the form referred to in subsection (2); or
    2. any supply made to the registered person that is a supply of secondhand goods to which section 3A(1)(c) applies,—
to the extent that—
11. as at the commencement of the day on which the new rate of tax comes into force, the consideration for the supply—
    1. remains unpaid; and
    2. has not been written off by the registered person as a bad debt; and
12. the supply is not required to be taken into account (otherwise than pursuant to this section) in calculating the tax payable by the registered person in respect of—
    1. that part of the taxable period in which the new rate of tax comes into force that is required by section 78A to be covered by a Part 1 return; or
    2. any other taxable period ending before the new rate of tax comes into force; and
13. the supply is not charged with tax at—
    1. the rate of 0%; or
    2. a rate that is unaffected by the change to section 8; and
14. the supply, in the case of a supply made to the registered person, is a supply in respect of which—
    1. taxable supply information or supply correction information has been provided in accordance with sections 19K to 19N and is held by the registered person at the time the prescribed form is furnished in accordance with subsection (2); or
    2. section 19K(7) provides that taxable supply information is not required to be issued or section 19N provides that supply correction information is not required to be issued; or
    3. the registered person meets record-keeping requirements of section 19H, where the supply is a supply of secondhand goods to which that section relates.

15. For the purposes of this section, a taxable supply made by a registered person on or after the date on which the new rate of tax comes into force is treated as being made before that date if—

16. the registered person makes the supply as a private training establishment granted registration by the Qualifications Authority under section 387 of the Education and Training Act 2020; and
17. the consideration for the supply is held in trust on the day before that date; and
18. the registered person includes such supplies in the form referred to in subsection (2).

19. The adjustment required by this section shall be calculated as follows:

20. first determine the amount of consideration payable by the registered person on qualifying supplies made to the registered person:
21. subtract the amount of the consideration payable to the registered person on qualifying supplies made by the registered person:
22. multiply the resulting total by an amount equal to the old tax fraction subtracted from the new tax fraction (as respectively calculated in accordance with section 2 immediately before and immediately after the new rate of tax comes into force).

23. Where the amount of any adjustment calculated in accordance with this section is a positive amount, that amount shall, in relation to the registered person, be deemed to be output tax attributable to the taxable period for,––

24. the person's Part 1 return furnished under section 78A; or
25. the return for the taxable period ending with the day preceding the date on which the new rate of tax comes into force, if the person is not required to furnish a Part 1 return.

26. Where the amount so calculated is a negative amount, that amount shall be a credit to the registered person, and—

27. shall be set off against any amount of tax payable by the registered person in respect of any taxable period ending before the day on which the new rate of tax comes into force; and
28. to the extent that it cannot be so set off, shall be set off against any amount of tax payable by the registered person in respect of the taxable period in which the new rate comes into force; and
29. to the extent that it cannot be so set off, refunded to the person, subject to section 46(6).

30. Subject to subsections (6A) and (6B), where a registered person who has made an adjustment pursuant to this section subsequently writes off as a bad debt any amount that was consideration for a qualifying supply,—

31. the registered person shall make an adjustment of an amount equal to the amount written off as a bad debt, multiplied by an amount equal to the old tax fraction subtracted from the new tax fraction (as referred to in subsection (3)(c)); and
32. the amount of that adjustment shall, in the taxable period in which the amount is written off, be deemed to be—
    1. output tax where the amount of the adjustment is a positive amount; and
    2. input tax where the amount of the adjustment is a negative amount.

33. Where—

34. at any time after the new rate of tax comes into force, a registered person has been directed by the Commissioner pursuant to section 19 or section 19A to change from an invoice basis or a hybrid basis to a payments basis of accounting; and
35. that registered person subsequently writes off as a bad debt any amount that would have been consideration for a qualifying supply if that registered person had in fact been on the payments basis of accounting as at the date on which the new rate of tax came into force,—
that registered person shall, for the purposes of subsection (6), be deemed, in respect of such amounts written off as a bad debt, to have made an adjustment pursuant to subsection (1).

36. Where—

37. at any time after the new rate of tax comes into force, any registered person has been directed by the Commissioner pursuant to section 19 or section 19A to change from a payments basis to an invoice basis or a hybrid basis of accounting; and
38. that registered person subsequently writes off as a bad debt any amount that was consideration for a qualifying supply,—
that registered person shall, for the purposes of subsection (6), be deemed, in respect of such amounts written off as a bad debt, to have not made an adjustment pursuant to subsection (1).

39. For the purposes of this section, a registered person shall, in respect of all qualifying supplies made by or to that person, prepare—

40. a list of debtors of the registered person showing the amounts due to that person as at the commencement of the day on which the new rate of tax comes into force; and
41. a list of creditors of the registered person showing the amounts due by that person as at the commencement of that day.