VAT adjustment calculation cleared after blocking: when to report it in the VAT return

VAT returns and adjustment calculations

Individuals and companies registered for VAT often find themselves having to refund part of an amount that was paid earlier. To report these adjustments to the tax authority, the reporting itself has to be corrected. Under the law, a supplier may reduce the amount of VAT only once the adjustment has actually been made. A downward adjustment is always reflected in the VAT the taxpayer will pay.

A VAT payer can reduce its tax liabilities, but the adjustment calculation first has to go through the relevant procedure. The calculation is registered and the blocking procedure ends once:

1. A temporary measure (suspension of registration) has been applied.
2. It has been established whether the details of the calculation were submitted late for registration in the Unified Register of Tax Invoices (YeRPN).

The law sets out a procedure that has to be followed. If it is ignored, the taxpayer may end up with incorrect VAT figures in the return once the adjustment calculation is reported, and the amount shown will be overstated. The data should therefore be brought into line with the actual position by filing clarifying documents and calculations, which are included in the VAT return for the reporting period. This is set out in paragraph 50.1 of the Tax Code of Ukraine.