5.5 Payment and Recovery of VAT

Payment: the net tax (output minus credit) by the monthly return's date; interest on delay; e- payment the ordinary channel. Refund: exporters and zero-rated traders run input-heavy cycles — the Act's refund claims (with verification; interest on delay where provided) are the exporter's lifeline and historically the system's friction point. Recovery: unpaid VAT follows the tax laws' recovery machinery — demand notice, then coercive collection; the charge concept (Unit 4) applies its VAT analogue — the tax attaches to assets with statutory priority. The officer's powers on the way: summons and examination, entry and inspection of premises, access to books and records, audit and investigation — under the Act's safeguards (the taxpayer's shields: notice, reasons, appeal — Units 7 and 9). VAT fraud (the schemes to name): fake invoicing (invoices without supply — credits from thin air), circular trading (goods looping to inflate turnover and credits), undisclosed sales (no invoice, no output tax), refund fraud (inflated export claims) — countered by invoice matching (automated in e-systems), registration hygiene, audit analytics and prosecution. Exam Focus Long questions: (i) The VAT concept — the credit mechanism with a worked chain (three firms, 13%); (ii) The registration-collection-return-payment-recovery cycle (the syllabus's five heads in order); (iii) VAT fraud and its counter-measures. Short questions: zero-rating vs. exemption; the tax invoice; place of supply; the destination…