VAT deemed charge on self supply

Calculating the amount of the charge

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Think I'm over analysing this one.

Client runs a hotel and occasionally provides rooms and dining to family and friends free of charge. HMRC's VAT toolkit states "When goods on which a business has claimed input tax in full (such as an item of stock) are subsequently put to private or non-business use, there is generally a deemed supply for VAT purposes and output tax is normally due on the cost of the supply. The deemed supply is one of goods if the change of use is permanent and of services if temporary."

How would you normally calculate the deemed charge - direct costs plus an apportionment of overheads? 

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RLI
By lionofludesch
21st Oct 2018 17:52

I think that the client is mostly supplying services.

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By the_drookit_dug
22nd Oct 2018 08:57

As Lennartz cannot be applied to buildings, I guess they're looking at a deemed charge at commercial rates to protect input VAT recovery...

Presumably the catering can still be accounted for at cost.

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ALISK
By atleastisoundknowledgable...
22nd Oct 2018 08:20

I’d say food at cost but that’s about it. if you want to be precise/[***]/waste time then calculate a charge for elec & laundry.

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Replying to atleastisoundknowledgable...:
RLI
By lionofludesch
22nd Oct 2018 08:51

Electricity is goods but laundry is surely a service.

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