PE66300 | Other Partial Exemption issues: Lennartz treatment: Capital Goods Scheme (CGS) considerations

Although it is unlikely that there will be significant amounts of new input tax going through the Lennartz sector in the years after the building work is completed, it is vital to the correct functioning of the CGS (via regulation 116(1)) in subsequent intervals that these sectors remain in the PESM. If the PESM is changed to remove them then a regulation 116(2) agreement is likely to be needed to compensate for this. This must be considered when negotiating any such change.