Capital Allowances Act 2001 section 360W

Additional VAT liabilities and writing off initial allowances

Section 360W explains how initial allowances relating to additional VAT liabilities on business premises allowance assets are written off when the VAT liability arises after the premises are already in use.

• An additional VAT liability may arise after qualifying business premises are already in use or available for letting
• Where an initial allowance is given in respect of such an additional VAT liability, it must be written off
• The allowance is written off at the point in time when the additional VAT liability accrues
• This ensures the timing of the write-off aligns with when the VAT cost is actually incurred, rather than when the premises first came into use