Capital Allowances Act 2001

Additional VAT liabilities and initial allowances: further case

76 (1) This paragraph applies if—

(a) a person was entitled to an initial allowance in respect of qualifying enterprise zone expenditure, and

(b) the person entitled to the relevant interest in relation to that expenditure incurs an additional VAT liability in respect of that expenditure,

but there is no entitlement to an initial allowance under section 346 because the condition in subsection (1)(d) of that section is not met.

(2) If in such a case—

(a) the conditions in paragraph 74(1) are met except for the condition that the original entitlement to an initial allowance was in respect of 1992-93 qualifying expenditure, and

(b) some or all of the qualifying enterprise zone expenditure would have been 1992-93 qualifying expenditure but for paragraph 76(2),

the person entitled to the relevant interest is entitled to an initial allowance under paragraph 74(3) on the appropriate part or on all of the additional VAT liability (as the case may be).

(3) The allowance is made for the chargeable period in which the additional VAT liability accrues.