Capital Allowances Act 2001 section 448

Additional VAT rebate generates disposal value

Section 448 deals with what happens when a person who has claimed research and development allowances on qualifying expenditure subsequently receives an additional VAT rebate relating to that expenditure.

• When a person receives an additional VAT rebate on expenditure that qualified for R&D allowances, the rebate must generally be treated as a disposal value for capital allowances purposes.
• The section does not apply if the person no longer owns the asset, the asset has been demolished or destroyed, or the rebate is already being dealt with under the plant and machinery allowances rules in Part 2 of the Act.
• The rebate amount is brought into account as a disposal value for the chargeable period in which it accrues, or if it accrued before the trade commenced, it is treated as arising in the period the trade started.
• If a disposal value already needs to be recognised under section 443(1) for the same expenditure in the same period, the VAT rebate is added to that existing disposal value rather than being treated as a separate one.