Capital Allowances Act 2001 section 240

Additional VAT liability

Section 240 provides for a further balancing allowance where an additional VAT liability arises after the final chargeable period of a short-life asset pool.

• Applies where a balancing allowance was given on the closure of a short-life asset pool and an additional VAT liability is incurred after that period
• The additional VAT liability must relate to the original expenditure on the short-life asset and must not have been taken into account in calculating the original balancing allowance
• The person is entitled to a further balancing allowance equal to the amount of the additional VAT liability
• The further balancing allowance is given in the chargeable period in which the additional VAT liability accrues