Capital Allowances Act 2001 section 235

Additional VAT liability treated as qualifying expenditure

Section 235 deals with the treatment of additional VAT liabilities that arise after original qualifying expenditure has been incurred on plant or machinery, allowing such liabilities to be treated as further qualifying expenditure.

• When an additional VAT liability arises on expenditure that already qualifies for capital allowances, it can itself be treated as qualifying expenditure.
• The plant or machinery must still be in use for the purposes of the qualifying activity at the time the additional VAT liability is incurred.
• The additional VAT liability is treated as expenditure on the same plant or machinery as the original expenditure, ensuring disposal value caps operate correctly.
• The additional qualifying expenditure is taken into account in the chargeable period in which the additional VAT liability accrues.