New Forest


VAT is due on early termination fees and compensation payments

HMRC have released new guidance which states that any early termination or cancellation fees; or compensation paid as part of a contract is liable for VAT.

Previously, HMRC guidance advised that where fees were charged for early termination, they would not be subject to VAT as they were not for a supply of goods. Following the Court of Justice of the European Union (CJEU) judgments in a case, the Revenue have changed their policy to follow the ruling which means that charges or fees are normally considered as being for the supply of goods or services and therefore should be subject to VAT.

New new guidance can be found here VATSC05910 & VATSC05920

The HMRC briefing paper on the new guidance can be found here.

For further information on VAT, please contact Alan Rolfe on 023 8046 1235.

Latest Tweets

Class 2 NICs are currently paid by self employed earners, however certain business property owners are also liable to pay contributions

For children born from September 2020 the Government provided vouchers for a tax free account, which can be accessed once they reach the age of 18! More information is available here

Let’s Talk

Why not arrange a FREE consultation and find out what we can do for your business.