HMRC has now completed its review of the VAT position of early termination charges and compensation payments, and published revised guidance on the gov.uk website. This is long awaited guidance and is an important release from HMRC given the wide range of businesses which will be affected.
HMRC’s new policy will come into effect on 1 April 2022, so organisations that pay or receive such sums should review their VAT treatment as soon as possible.
Source RSM
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