Capital Allowances Act 2001 section 360V

Additional VAT liabilities and writing-down allowances

Section 360V explains how additional VAT liabilities arising in connection with qualifying expenditure on patents are handled for capital allowances purposes.

• The section applies where the holder of the relevant interest incurs an additional VAT liability relating to qualifying expenditure on patents.
• An additional VAT liability typically arises when there is a change in the VAT treatment of the original expenditure, resulting in further VAT becoming due.
• The additional VAT liability is itself treated as qualifying expenditure, meaning it qualifies for writing-down allowances in its own right.
• The residue of qualifying expenditure is increased by the amount of the additional VAT liability at the time the liability accrues.