Capital Allowances Act 2001 section 241

No annual investment allowance or first-year allowance in respect of additional VAT liability

Section 241 ensures that the prohibition on annual investment allowances and first-year allowances under the anti-avoidance rules extends to any additional VAT liability arising from the same transaction.

• Where a transaction between two parties is caught by the anti-avoidance provisions and the buyer's expenditure is already denied an annual investment allowance or first-year allowance, any additional VAT liability on that same expenditure is also denied those allowances.
• No annual investment allowance or first-year allowance may be claimed in respect of any additional VAT liability the buyer incurs in connection with expenditure under the relevant transaction.
• If an annual investment allowance or first-year allowance relating to such additional VAT liability has already been given, it must be withdrawn.
• This section is one of six provisions that address the VAT aspects of the anti-avoidance rules for plant and machinery allowances.