V16.931 HMRC Guidance—assets used partly for non-business purposes—implementation of “Lennartz Accounting” Regulations
Information Sheet 14/07, November 2007
What is this Information Sheet about?
This Information Sheet provides comprehensive guidance on the “Lennartz Accounting” regulations, which came in to force on 1 November 2007.
2.1 “Lennartz” VAT accounting introduction
At the time a taxable person receives a supply he may be doing so either in the capacity of a private person or in the course of his business. The capacity in which he is acting will determine whether he can deduct the VAT incurred on that supply as input tax.
If the supply is used solely for making supplies in the course of his business, all of the VAT is input tax and he is entitled to deduct the input tax incurred to the extent it is used for making taxable supplies (or other supplies carrying a right to input tax deduction under VATA s 26: references to taxable supplies in this section should be read accordingly).
Where he incurs tax on goods that are intended for both business and private/nonbusiness purposes, he has a choice as to how to treat them for VAT purposes—
— he may treat them as a wholly non-business or private asset, in which case the VAT incurred is not deductible
— he may treat them as a part business, part non-business asset, in which case the VAT incurred is only deductible to the extent that it relates to the taxable business activities [VATA s 24(5)] or
— he may