What happens if my company is unable to separate business and personal usage?
If you cannot show a method which is deemed ‘fair and reasonable’ a figure will be imposed by HMRC which can often represent a figure larger than is actually the case. This will mean you are unable to reclaim VAT on a larger proportion of your purchases than would otherwise be the case. In addition, previous tax periods may be assessed for discrepancies. At all times visiting VAT officers will check to ensure that the amount you treated as input tax is ‘fair and reasonable’.
