11.6.1 General rule

The general rule is that a payment or other benefit made available to a tenant for entering into a lease is outside the scope of VAT. This is on the basis that the tenant is not providing any taxable supplies if all he is doing in return is to agree to observe the obligations that a tenant normal owes under the lease. However, VAT can be chargeable if the payment is directly linked to any benefits that a tenant provides outside the normal lease terms (C & E Commrs v Mirror Group plc).

The following is a summary of the position:

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