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Example 1 � Own goods used for business and non-business purposes

A business moves its own goods that it uses in GB for both business and non-business activities to NI. »Ê¹ÚÌåÓýapp net value of the goods was £200. £40 import VAT is incurred on this movement.

»Ê¹ÚÌåÓýapp business can only recover 50% of its input tax (£20) incurred in GB because 50% is subject to non-business use. »Ê¹ÚÌåÓýapp business accounts for £40 on the movement into NI as output tax on its return, it can also recover £20 of this VAT as 50% relates to business activity. As the business can also reclassify the original supply to fully taxable business use, it can also recover the £20 VAT that it did not claim on the original supply.

»Ê¹ÚÌåÓýapp net result is, £40 is accounted for as output tax (on the movement from GB to NI) and £40 is reclaimed as input tax (£20 relates to 50% of the import VAT charged on the movement from GB to NI and £20 from reclassification of the original supply to fully taxable), resulting in a nil net effect.

Example 2 � Own goods used solely for non-business purposes

An organisation (public body) moves its own goods that it uses in GB for solely non-business purposes to NI. »Ê¹ÚÌåÓýapp net value of the goods was £200. £40 VAT is accounted for as output tax on this movement.

»Ê¹ÚÌåÓýapp business could not recover any of the VAT incurred in GB on the original supply because the goods are for non-business use.

»Ê¹ÚÌåÓýapp business accounts for £40 on the movement into NI as output tax on its return. It cannot recover the import VAT of £40 as the goods are used for a non-business purpose. However, it can now reclassify the original supply as being attributable to a taxable supply, meaning that it can recover the £40 VAT charged on that supply as input VAT in the same period.

»Ê¹ÚÌåÓýapp net result is, £40 is accounted for as output tax (on the movement from GB to NI) and £40 is reclaimed as input tax (from reclassification of the original supply) resulting in a nil net effect.