A person who holds the relevant interest in an enterprise zone
building may incur additional VAT in respect of qualifying
enterprise zone expenditure. If that happens the additional VAT
qualifies for enterprise zone allowance provided that the building
qualified for enterprise zone allowance and the additional VAT is
incurred during the life of the zone.
The person who incurs the additional VAT does not need to be
the person who constructed the building and claimed enterprise zone
allowance. The additional VAT qualifies for enterprise zone
allowance no matter who incurred it provided that it is in respect
of qualifying enterprise zone expenditure and was incurred during
the life of the zone.
Example Stanley constructs a building in an
enterprise zone during the life of the zone and claims enterprise
zone allowance. Two years later he sells the building to Ken and
the sale is treated as a transfer of a going concern for VAT
purposes. Ken changes the use of the building and incurs an
additional VAT liability in respect of the qualifying enterprise
zone expenditure incurred by Stanley. If Ken incurs the additional
VAT liability during the life of the zone he can claim initial
allowances on it.
