12. In regulation 114 (period of adjustment) for paragraphs (3) and (4) substitute—
“(3) Subject to paragraphs (3A) and (3B), the period of adjustment is—
(a)10 successive intervals in the case of a capital item of a description falling within regulation 113(2)(a) to (c);
(b)5 successive intervals in the case of a capital item of a description falling within regulation 113(2)(d) to (f),
determined in accordance with paragraphs (4) to (5B) and (7).
(3A) If, at the time of the owner’s first use, the number of intervals specified in paragraph (3)(a) or (b) (as may be the case) exceeds the number of complete years that the owner’s interest in the capital item has to run by more than one, the number of intervals shall be reduced to one more than the number of complete years that the owner’s interest has to run calculated from the date of the owner’s first use of the item (but not to less than three intervals).
(3B) Where the owner’s interest falls within regulation 112(3), the number of intervals shall be the same as the numerator of the fraction in paragraph 37(5) of Schedule 10 to the Act.
(3C) Where paragraph (3A) or (3B) applies, the relevant denominator in regulation 115(1) shall be adjusted accordingly.
(3D) Where a person who registers for VAT already owns an item of a description falling within regulation 113, for the purposes of calculating the period of adjustment—
(a)one complete interval shall be deducted for each complete year which has elapsed since the date of that person’s first use of the capital item prior to the date of VAT registration, and
(b)the first interval applicable to the capital item which ends after the date of VAT registration shall be treated as a subsequent interval for the purposes of regulation 115(1).
(4) Subject to paragraphs (5A), (5B) and (7), the first interval applicable to a capital item shall commence on the day on which the owner first uses the capital item and shall end on the day before the start of his next tax year whether or not this is his first tax year.”.