Lennartz is a rule which allows VAT to be reclaimed on expenditure where the asset is to be used both for taxable and non-business purposes, in compensation for which a tax charge arises periodically over a writing-down period to reflect the degree of non-business use.
This gives a cashflow advantage, though in theory at least, the same VAT cost should arise over time as if there had been an initial apportionment of the VAT to reflect non-business usage.
It tends to be used by small businesses, where an asset might have a partly private use, and, of course, charities which have non-business activities.
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New VAT changes
Socrates Socratous takes us through the latest VAT changes which could affect your charity.
Unwind Lennartz to save VAT?
Richard Wild considers whether remaining with your Lennartz arrangements is the right way forward after the HMRC outlined options for organisations committed to the accounting system.
Socrates Socratous and Linda Skilbeck report on the result of the first UK VAT case since the ECJ’s decision in VNLTO cast doubt on the Lennartz principle.
Technical briefing: Input tax concessions on land and property
Two little-known VAT concessions on land and property are to be radically amended by HMRC this year. Broadly speaking, these concessions are of benefit to a property owner who is charged VAT on the purchase of a property, is initially denied VAT recovery because he treats the rent as exempt, but decides later to opt to tax the building.
Technical briefing: No more Lennartz?
After considerable deliberation, HMRC has now effectively announced that Lennartz is dead for charities.
Technical briefing: VAT concessions go
So, farewell Lennartz? Herr Lennartz was (or is) a German tax consultant, whose name became the tag of a VAT accounting treatment which has become well-known among UK charities.
Technical briefing: VAT and renovation
The Whitechapel Art Gallery is a registered charity and displays works of art to the general public for no consideration. It acquired an old derelict library building adjacent to its existing premises for £900k with the intention of converting it into a gallery.
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