VAT on reverse premiums & dilapidation payments

This article covers VAT on two issues of interest to corporate occupiers namely reverse premiums and dilapidation payments.

Reverse premiums: It is common practice especially in a difficult economic climate for landlords to offer inducements or incentives to prospective tenants for entering or renewing a lease.

These incentives can take many forms but typically will consist of rent-free periods or contributions towards fit-out costs.

In property jargon monetary inducements are often referred to as reverse premiums on the grounds that a premium is being paid by the landlord rather than as one would typically expect the tenant.

Where...