In Holiday Inns (UK) Ltd [1994] BVC 543, no writs had been issued when the parties agreed to terminate a contract with Holiday Inns receiving £2m and without invoking the termination clause in the contract. The tribunal stated at p. 549 that there were various ways of settling disputes and the VAT treatment should not depend on the form adopted. The essential nature of the payment was compensation for loss of future income and did not directly concern supplies. Thus, Holiday Inns escaped accounting for output tax on the £2m.

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