Policy paper

Revenue and Customs Brief 12 (2020): VAT early termination fees and compensation payments

This brief gives an update on the VAT treatment of compensation and similar payments following recent judgments of the Court of Justice of the European Union (CJEU).

• From: HM Revenue & Customs
• Published: 2 September 2020
• Last updated: 25 January 2021 — See all updates

Documents

Revenue and Customs Brief 12 (2020): VAT early termination fees and compensation payments

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Details

After communication from businesses and their representatives, HMRC has decided to apply the updated VAT treatment set out in this brief from a future date.

We will issue revised guidance, and a new Revenue and Customs brief to explain what businesses need to do shortly. This will include guidance on what to do if they have already changed how they treat such payments because of this brief.

Until that guidance is issued businesses can either:

• continue to treat such payments as further consideration for the contracted supply
• go back to treating them as outside the scope of VAT, if that is how they treated them before this brief was issued

Published 2 September 2020
Last updated 25 January 2021 + show all updates

1. 25 January 2021

   HMRC has decided to apply the updated VAT treatment set out in this Brief from a future date.

2. 2 September 2020

   First published.