Capital Allowances Act 2001 section 238

Additional VAT rebate generates disposal value

Section 238 deals with what happens when a person receives an additional VAT rebate relating to qualifying expenditure on plant or machinery, and how that rebate must be treated as a disposal value for capital allowances purposes.

• When an additional VAT rebate is received on qualifying expenditure for plant or machinery still owned in that period, a disposal value must be recognised
• If no other disposal value already exists for that plant or machinery in the period, the rebate amount itself becomes the disposal value
• If another disposal value already exists for that plant or machinery in the period, the rebate amount is added to that existing disposal value
• The effect in most cases is to reduce the qualifying expenditure remaining in the relevant capital allowances pool