Capital Allowances Act 2001 section 360U

Additional VAT liabilities and initial allowances

Section 360U provides for an initial allowance where a person incurs an additional VAT liability in connection with qualifying expenditure on a qualifying building under the business premises renovation allowance rules.

• Where a person was entitled to an initial allowance on qualifying expenditure and later incurs an additional VAT liability on that expenditure, a further initial allowance is available
• The additional VAT liability must arise at a time when the building is, or is about to be, qualifying business premises
• The initial allowance is 100% of the amount of the additional VAT liability, given for the chargeable period in which the liability accrues
• The person claiming the allowance may elect to reduce it to a specified amount