Last month we wrote about HMRC’s decision to allow VAT to be paid on early termination fees but they have now committed to revising the Revenue and Customs Brief (RCB) 12 (2020).

They will be looking at whether the customer has a legitimate expectation that early terminations and other similar payments are outside of the scope of VAT before the publication of RCB 12.

They’ve also advised they will expand the guidance available to help businesses and their customers understand what VAT is and isn’t applicable on.  HMRC have advised the British Vehicle Rental and Leasing Association (BVRLA) that they will respond to their representation and provide the industry with an opportunity to comment on this guidance before it’s published.

Until this guidance is in place HRMC’s operational team have been advised to take no proactive action based on RCB 12.

If you have any questions about how this could affect your lease then please give us a call on 0330 221 0000.

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