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HMRC internal manual

Capital Allowances Manual

Business Premises Renovation Allowance: Additional VAT

CAA01/Ss 360T, 360U, 360W, 360X and 360Y

A person who was entitled to initial allowance on a qualifying building may incur anadditional VAT liability in respect of that building. If so the additional VAT liabilityqualifies for initial allowance. If the initial allowance is made after the premises arefirst used or available for letting the initial allowance is written off when theadditional VAT liability accrues.

If the person who has the relevant interest in a qualifying building incurs an additionalVAT liability it is treated as qualifying expenditure and added to the residue ofqualifying expenditure.

The making of an additional VAT rebate to the person entitled to the relevant interest isa balancing event.

There is no balancing allowance.

There is a balancing charge if the additional VAT rebate is more than the residue or theresidue is nil. The balancing charge is the difference between the additional VAT rebateand the residue or the additional VAT rebate if the residue is nil.

An amount equal to the additional VAT rebate is written off when it accrues.