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HM Revenue and Customs Brief 56/07


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issued 13 August 2007

Assets used partly for non-business purposes – delay in implementation of ‘Lennartz Accounting’ Regulations

At Budget 2007 a package of 3 measures was announced concerning the VAT treatment of assets to be used partly for non-business purposes - further details are set out in Budget Note 56. The ‘Lennartz Accounting’ regulations, referred to in section (b) under ‘General Description of the Measure’ in the Budget Note, which were due to come into force on 1 September 2007, will now come into force on 1 November.

As explained in the Budget Note, ‘Lennartz Accounting’ is where a business allocates an asset wholly to business purposes, recovers all the VAT charged up front (subject to the normal partial exemption rules) and accounts for VAT on the non-business use in each VAT return period. The Lennartz Accounting regulations will specify the “economic life” of a ‘Lennartz asset’, that being the period over which private use should be accounted; and set out how taxpayers must account for any private or non-business use.

The Government has decided to delay the implementation of these Regulations until 1 November 2007. HMRC received some very helpful comments on the draft Regulations during consultation and this short delay will allow HMRC to take full account of these comments. Please note that any resulting changes to the regulations will not alter the basic position that, in future, the “economic life” of land and buildings will be 10 years.

The rest of the package has been implemented as announced.

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Article Published/Sorted/Amended on Scopulus 2007-08-23 12:42:33 in Tax Articles

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