Finance Act 2016

Amendment of section 61 of Principal Act (apportionment for dual-use inputs)

46. Section 61 of the Principal Act is amended—

(a) by substituting the following for subsections (4) and (5):

“(4) Subject to subsection (5), the proportion of tax deductible by an accountable person in a taxable period shall be calculated on the basis of the ratio which the amount of the person’s tax-exclusive turnover from deductible supplies or activities in the accounting year in which that taxable period ends bears to the person’s tax-exclusive turnover from total supplies and activities in that accounting year.

(5) Where the proportion of tax deductible calculated in accordance with subsection (4) does not—

(a) correctly reflect the extent to which the dual-use inputs are used for the purposes of the person’s deductible supplies or activities, or

(b) have due regard to the range of the person’s total supplies and activities,

the accountable person shall use any other basis which results in a proportion of tax deductible which—

(i) correctly reflects the extent to which the dual-use inputs are used for the purposes of the person’s deductible supplies or activities, and

(ii) has due regard to the range of the person’s total supplies and activities.”,

and

(b) in subsection (6) by substituting “this section,” for “subsection (4),”.