VBNB22110 | VAT Business and non-business basic principles: Sole proprietor with business and private activities

Sole proprietors in business for VAT purposes may have a mix of business and private activities. Some of the private activities may involve supplies, particularly investment portfolios and hobbies. However, it is important for both input tax and output tax purposes to distinguish which activities are business and which are not.

If an activity is not a business activity no output tax will be due on those supplies and none of the related VAT on costs can be claimed. Where costs are incurred both for business and non-business activities, the VAT on those costs will need to be apportioned. Please see VIT25000 for guidance on how to make an apportionment. For capital items that are used both for private and business use, an alternative approach may be used, see VIT25510.