295. Surrenders.

Surrenders in the course of a business are exempt from value added tax (VAT)1. They may be taxable if the tenant has exercised his option to tax in respect of his leasehold interest2. If the tenant has exercised his option to tax in respect of his leasehold interest, and if the landlord is paying the tenant for the surrender, the tenant is making a standard-rated supply of an interest in the land. Where the consideration for the surrender is other than in money, VAT is payable on the value of the interest surrendered