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Capital Allowances Act 2001

Paragraph 46 to 51

2058.These paragraphs maintain entitlement to first-year allowances for additional VAT liabilities in respect of plant or machinery within the VAT capital goods scheme. This arises broadly if:

  • there was expenditure on computers which qualified for first-year allowances in the period 1 November 1992 to 31 October 1993 or 2 July 1997 to 1 July 1998;

  • the expenditure was incurred by a partially-exempt business; and

  • the proportion of exempt business changes.

2059.This affects a tiny minority of taxpayers. They will all have had to claim the first-year allowances in accordance with the legislation for the periods in question. The possibility of additional VAT liabilities only arises for up to ten years after the expenditure. So the legislation is both transitory and of only very limited interest.

2060.The same approach is taken to initial allowances for contracts entered into between October 1992 and November 1993 for buildings in enterprise zones. See paragraph 75.

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