Q&As

If the landlord agrees to refund annual rent paid in advance for the period after a break date (assuming the break is exercised), is it correct or appropriate that the landlord should also refund the VAT paid on that rent?

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Published by a LexisNexis Tax expert
Last updated on 29/03/2018

The following Tax Q&A provides comprehensive and up to date legal information covering:

  • If the landlord agrees to refund annual rent paid in advance for the period after a break date (assuming the break is exercised), is it correct or appropriate that the landlord should also refund the VAT paid on that rent?

If the landlord agrees to refund annual rent paid in advance for the period after a break date (assuming the break is exercised), is it correct or appropriate that the landlord should also refund the VAT paid on that rent?

We have assumed that this is a standard-rated lease, ie a lease under which the rent attracts value added tax (VAT). This would normally be the case where the landlord has exercised the option to tax and the option has not been disapplied.

If the break clause in a lease provides that the landlord will refund any rent paid in advance for the period after a break date, then it will be a matter for negotiation whether the refund will extend to the VAT element of that payment.

The landlord may be unwilling to refund the VAT because

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