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Where Taxpayers and Advisers Meet

VAT and services for private or non-business use

AngryVATman
Posts: 7
Joined: Wed Aug 08, 2018 11:06 pm

VAT and services for private or non-business use

Postby AngryVATman » Wed Nov 13, 2019 1:46 pm

I'd be very grateful for a little clarification - HMRC's webpage https://www.gov.uk/guidance/vat-private-use-and-self-supply-of-goods-and-services#services-you-use-privately states: "You might sometimes purchase services for your business but then put them to private or non-business use. This includes making private use of the services yourself or making the services available to others for their own private use. If you do this, your business may be making a VAT taxable supply of services on which you need to account for VAT."

However, VATSC083810 states: "The VAT (Supply of Services) Order 1993 (SI 1993/1507) came into effect on 1 August 1993. It ensures that private or non-business use of services is taxed where initially the tax was recovered because the services were originally purchased wholly for business purposes."

The latter would imply that a taxable supply should only be accounted for input VAT has been fully reclaimed on the purchase of the service, whereas the former suggests that a taxable supply is made in all cases.

Which is correct? If services for which no VAT has been claimed are used for private or non-private purposes for nil consideration, is there a deemed supply?

AngryVATman
Posts: 7
Joined: Wed Aug 08, 2018 11:06 pm

Re: VAT and services for private or non-business use

Postby AngryVATman » Wed Nov 13, 2019 1:50 pm

* where input VAT has been fully reclaimed

les35
Posts: 566
Joined: Wed Aug 06, 2008 3:09 pm

Re: VAT and services for private or non-business use

Postby les35 » Wed Nov 13, 2019 6:13 pm

I fear the guidance you quoted in VATSC083810 is mis-leading. As I read the SI, the output tax charge applies even where the taxpayer has only be entitled to recover part of the VAT charged (art 6).

Do you have a specific issue or dispute with HMRC?

AngryVATman
Posts: 7
Joined: Wed Aug 08, 2018 11:06 pm

Re: VAT and services for private or non-business use

Postby AngryVATman » Wed Nov 13, 2019 8:06 pm

No dispute with HMRC, just looking to advise a client on how best to deal with private use of goods and services.

I'd always thought that the two options were to either A) charge output VAT on the private use or B) to restrict input VAT recovery, and was just looking to ensure I have my sources documented.

In fact, on some of the expenditure with a private element the client doesn't suffer any input VAT at all.

Trevor S
Posts: 34
Joined: Tue Jan 01, 2019 12:37 am

Re: VAT and services for private or non-business use

Postby Trevor S » Thu Nov 14, 2019 7:13 pm

The guidance in the Input Tax manual may also be relevant, it's split over a number of pages, starting from this one: https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit25000

This covers goods/services put to both business and private use and explains when Lennartz can be used.


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