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HMRC internal manual

VAT Supply and Consideration

Further guidance on identifying supply: Supplies of goods for no consideration: Disposal of assets and application to non-business use when output tax is due

The following table summarises when output tax will be due:

## Input tax position {#IDAT0MIH} ## Temporary application to private and other non-business use {#IDAX0MIH}  
Wholly claimed (including Lennartz type cases - see below) Yes  
Apportioned between business and non‑business use No  
Apportioned between taxable and exempt business activities Yes  
Wholly not deducted because: not for business use (therefore not input tax) No
acquired for an exempt activity and wholly restricted under a partial exemption method No  
company car See Notice 700/64 Motoring expenses  
business entertainment (for example yacht) No  
supplier is not a taxable person No  

Certain computers, land and buildings acquired as assets of the business may be subject to the capital goods scheme. Please see Notice 706/2 Capital goods scheme for details of disposals of such capital items.

Business/non-business use: Lennartz ruling

Following the ECJ ruling in Lennartz v Finanzamt München 3 (case C97/90), you may find that a trader has reclaimed all the input tax incurred on the purchase of an asset which is to be used for both business and non business purposes. The ECJ ruling questioned the way the private use of business assets is dealt with for VAT purposes. A business which acquires assets partly for its business, and partly for other purposes, can deduct all the VAT incurred on the purchase as input tax, but must account for output tax each accounting period on any non-business use. Traders may nevertheless continue to use apportionment as provided under the VAT Act 1994, Section 24(5). The ruling does not apply to cars, items used for business entertainment or goods where business use is exempt. For further information on the application of the Lennartz ruling please see V1-13 Input Tax.