After a long period of uncertainty, HMRC have finally issued their decision as to whether or not valued added tax (“VAT”) is chargeable on dilapidations payments.
Historically, dilapidations payable by a tenant at the end of a lease had not been subject to VAT. The payment was to compensate the landlord for having its premises returned in disrepair, contrary to the tenant’s promise to keep them in repair. Truly compensatory payments have historically been treated as not subject to VAT as it was considered they were not payments for a supply of goods or services.
Continue Reading As you were! HMRC decides no VAT payable on dilapidations payments after all