VAT News

HMRC Policy news – Compensation and Dilapidations – 1 April 2022


As readers will be familiar the VAT treatment of charges under these headings have been the subject of much discussion in recent years. There has been a Policy Paper released by HMRC to alert interested parties to updated guidance on the VAT treatment, which is found in their internal VAT manuals, which is a useful read. Clearly we may be talking about contracts covering supplies of goods or services in the context of compensation in all its forms. The intention appears to err on the perspective of qualifying payments falling as outside the scope of VAT, however, it will remain important to ensure that contractual terms provide clarity to determine the VAT treatment being applied.

It remains an area to take care over therefore.

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