BB/12C/05 VAT—landlord inducements to tenants entering leases
Business Brief, Issue 12. 15 June 2005
This Business Brief article provides revised guidance on the VAT status of inducement payments by landlords to tenants. It replaces earlier guidance in Business Brief 4/03, dated 27 May 2003.
Business Brief 4/03
Business Brief 4/03 set out Customs' policy following the European Court of Justice (ECJ) and High Court decisions in the case of Trinity Mirror plc (formerly Mirror Group plc).
In paragraph 26 of the ECJ's judgment, it was held that a “tenant who undertakes, even in return for a payment from the landlord, solely to become a tenant and pay the rent does not, so far as that action is concerned, make a supply of services to the landlord”. The High Court subsequently held that paragraph 26 of the ECJ judgment is narrowly drawn, and Business Brief 4/03 sought to give guidance on that.
In line with the High Court ruling, Business Brief 4/03 advised that “a prospective tenant receiving an inducement payment would make a