By Scott Craig, VAT Partner, Scott-Moncrieff

The Lennartz mechanism allows VAT incurred on the purchase, construction or refurbishment of buildings to be recovered where the buildings are put to both taxable business and non-business use. An output tax charge or repayment of VAT is then applied over the next 10 years (based on non-business use of the building). Lennartz can provide a significant cashflow benefit.

Click here to view as a pdf

New Policy

From 22 January 2010, Lennartz accounting will not be available for business assets put to non-business use.

How does this affect you?

New Projects - If you are considering a new construction project you should speak to HMRC immediately. HMRC have advised us that some new projects could still qualify. We could help you to obtain Lennartz approval from HMRC.

Existing/completed projects - If you already use Lennartz you have two choices:

1. Continue to monitor the VAT you recovered in accordance with your Lennartz agreement.

or

2. Undo your claim and repay any VAT benefit to HMRC.

Either way you will have to notify HMRC what you intend to do. We can help you to do this.

If you would like more information on this please contact our VAT partner Scott Craig in the first instance. Please feel free to contact the Scott Moncrieff VAT Team if you would like to discuss this or any other VAT issues:

Edinburgh
Scott Craig: scott.craig@scott-moncrieff.com
Alan Glen: alan.glen@scott-moncrieff.com
Iain Masterton: iain.masterton@scott-moncrieff.com
Tel: 0131 473 3500

Glasgow
Greg McNally: greg.mcnally@scott-moncrieff.com
Anthony Cochrane: anthony.cochrane@scott-moncrieff.com
Tel: 0141 567 4500