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Payment of VAT on a break premium (Ventgrove v Kuehne)

Published on: 20 January 2022
Published by: LexisPSL
  • Payment of VAT on a break premium (Ventgrove v Kuehne)
  • What are the practical implications of this case?
  • What was the background?
  • What did the court decide?
  • Case details

Article summary

Property Disputes analysis: The tenant had a break option which was conditional on paying a break premium to the landlord ‘together with any value added tax (VAT) properly due thereon’. The court decided that the purpose of the words in inverted commas was to ensure that if the landlord had to account to HMRC for any VAT due on the break premium, the amount of that VAT would be paid by the tenant in addition to the break premium. The words were not there to enable the landlord to obtain a windfall payment (which would happen if the landlord charged VAT, but was not required to account for that VAT to HMRC), nor were they there to provide a mechanism to frustrate the exercise of the break option. The court decided that as HMRC’s policy at the break date was not to require VAT to be paid on break premiums, the tenant had validly exercised its break option even though it had not paid to the landlord any VAT on the break premium. Written by David Harris, professional development lawyer at Browne Jacobson LLP. or take a trial to read the full analysis.

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