V16.981 Implementing the VAT Technical Directive and changes to the partial exemption and capital goods scheme rules
Information Sheet 6/11, March 2011
This Information Sheet provides information on implementing the EU Technical Directive, the combined business/non-business partial exemption method, treating assets as outside the business, changes to the Capital Goods Scheme (CGS) and legislating for a concession for VAT incurred before registration.
The Technical Directive
1.1 Who should read this guidance?
— incur VAT relating to land and property, ships, boats or other vessels, or aircraft that are to be used for exempt or non-business/private activities
— already use Lennartz accounting for any assets
— currently have items in the CGS
— are representative members of VAT groups with CGS items
— acquire CGS items before they register for VAT.
Before reading this guidance you will need to have an understanding of the partial exemption and CGS rules. Further information can be found in Public Notices 706 “Partial Exemption” and 706/2 “Capital Goods Scheme” (Part V8).
In this guidance, references to “taxable supplies” made by the taxpayer include any supplies made in the course of the taxpayer's business that carry a right to input VAT deduction. “Taxable business use” should be read accordingly.
1.2 What is this guidance about?
It provides information on:
— implementing new EU VAT law known as the “Technical Directive” (sections 2-4)
— the introduction of a combined business/non-business partial exemption method (section 5)
— treating all or part of an asset as held outside the business (section 6)