PN/82/87 Settlement of disputes

PN/82/87 Settlement of disputes

Press Notice 82/87. 19 November 1987

Customs and Excise have reviewed their policy on the VAT treatment of payments made under out-of-court settlements of disputes, after proceedings have been commenced by service of originating process (or appointment of an arbitrator).

They now take the view that, where such payments are in essence compensatory and do not relate directly to supplies of goods or services, they are outside the scope of VAT. This will be so even if the settlement is expressed in terms that the payment is consideration for the plaintiff's agreement to abandon his rights to bring

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