HMRC changes VAT tack on tenant-landlord relationship

The review has been outlined in HMRC Business Brief 12/05, and reverses previous guidance offered in Business Brief 04/03, published in May 2003 in relation to a European Court of Justice ruling on the tax status of inducement payments made by landlords to tenants. That ruling was interpreted by the High Court in a “narrow” way, HMRC states, which is why since May 2003, the guidance suggested any additional obligations attached to a rental contract, apart from paying rent, such as to redecorate every five years, would be sufficient to trigger VAT on the inducement payment as a “taxable s...