An overage is an agreement whereby a purchaser of land agrees to pay the vendor an additional sum of money, in addition to the purchase price, following the occurrence of a future specified event that enhances the value of the land. This entitles the seller to a proportion of the enhanced value following the initial sale. Overages may also be called clawbacks, or uplifts.
The VAT treatment is not free from doubt. HMRC’s current view is that the VAT treatment of the overage follows the VAT treatment of the initial supply.
Source: marcusward.co
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