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Clifford Chance

Clifford Chance


VAT treatment of termination payments

28 September 2020

Following recent European litigation, HMRC has announced a change to its practice in relation to the VAT treatment of early termination fees and similar payments, which will impact (inter alia) leases of moveable assets, including vehicles, machinery and other equipment. This change is particularly unwelcome in the COVID-19 era where there are likely to be more contract terminations than usual.

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