1. Section 23 is a deduction against rental income, not a capital allowance. The deduction is claimed in the first year of letting, usually giving rise to a rental loss which can be carried forward against future rental income.
If sold within 10 years, the deduction is clawed back from the claimant and given to the purchaser.
2. The situation you refer to, a surrender of a lease, requires the surrenderee to account for the VAT. As the property is not residential, it will not be possible for the surrenderee to opt to tax the lease (charge VAT on the lease) as the post 1 July 2008 VAT regime does not allow charging of VAT on residential property. So the surrenderee is caught.