Dear fellow taxpayer,

In today's tough times, financial woes force many small businesses to close their doors. Even in such dire events, you face Vat implications for cancelling the lease of your premises?

Sure, if your landlord has a soft heart and lets you go without penalizing you, there are no Vat implications. But, your landlord will probably expect some compensation for cancelling the lease.

Don't forget to charge Vat on the amount you pay him!

This is because when the landlord surrenders his rights under the lease (i.e. charges you a fee to cancel the lease), that action qualifies as the supply of a service for Vat purposes.

Then, claim back the Vat plus any other Vat you paid in connection with closing your business!

If you're lucky enough to still be in business, make sure you don't incur any additional costs (like penalties from the labour department) they could just be the final straw that sees your business shutting down!

Until next time.
 
Regards,

Peter Franck
Editor in Chief
The Practical Vat Handbook