Input tax must be recovered in the first tax period in which two conditions are satisfied:
a. the tax invoice is received; and
b. an intention to make the payment of consideration of the supply before the expiration of six months after the agreed date of payment is formed.
Upon receipt of a tax invoice, a taxable person can recover input tax only when an intention to make the payment within a prescribed period is formed. Therefore, if the intention to make the payment is formed in a tax period which is later than the tax period in which the tax invoice is received, the input tax can be recovered only in the later tax period.
It may be noted that where the input tax is not recovered in the tax period in which both the conditions are satisfied, the taxable person can recover the input tax in the immediate next tax period. If input tax is not recovered in the first two tax periods, a taxable person is required to submit a voluntary disclosure. The voluntary disclosure should amend the input tax reported in the VAT return of one of the two tax periods. Where a taxable person fails to make the payment of consideration before the expiration of six months after the agreed date of payment, the taxable person should reduce the input tax in the VAT Return of the tax period following the expiry of the six-month period. However, once the payment is made, the taxable person will again be entitled to recover the input tax.