Business Assets with Private Use - HMRC issues VAT update

Following a Dutch VAT case which has significantly restricted the use of 'Lennartz' accounting, HM Revenue and Customs (HMRC) have issued a new brief regarding its use.

Lennartz accounting (named after the VAT case which established the principle) involves claiming of all the input VAT on business assets with some element of private use, and then making a VAT charge (i.e. adding to the output VAT payable) for the private use on an ‘as you go’ basis. This is an alternative to the traditional method of accounting for VAT on such assets, which is to claim only the percentage of the input VAT corresponding to the percentage of business use.