What amounts to a surrender and regrant?

What amounts to a surrender and regrant?

1. When does a ‘surrender and regrant’ occur? A surrender and regrant occurs where variations to a lease are so inconsistent with the continuation of the existing relationship that the law deems the existing lease to have been surrendered and a completely new lease brought into being.

Is SDLT payable on a surrender and regrant?

A surrender usually triggers an SDLT liability but in this situation, the intention would be to use paragraph 16 in respect of an exchange of chargeable interests.

Is compensation for surrender of lease taxable?

Surrender payment made under the lease As a consequence, none of his acquisition costs and other capital expenditure will be allowable as a deduction in calculating his tax liability.

Does a surrender premium attract VAT?

HMRC has always recognised that payments for lease surrenders whether by the landlord or tenant – the latter is often known as a “reverse surrender” – are payments for supplies of land, so the payment is exempt from VAT unless an option to tax has been made by the party receiving the payment in which case it will be …

Is a lease extension a surrender and regrant?

This note explains that a deemed surrender and regrant of a lease will occur where the term of the lease is extended or additional property is added to the demise.

What does the term surrender and regrant mean?

During the Tudor conquest of Ireland (c. 1540–1603), “surrender and regrant” was the legal mechanism by which Irish clans were to be converted from a power structure rooted in clan and kin loyalties, to a late-feudal system under the English legal system.

Who pays SDLT on a surrender?

A landlord may have an SDLT obligation if he or she pays its tenant an amount, either cash or other consideration to surrender its lease. Conversely, where a tenant pays a reverse premium to the landlord as acceptance of a surrender, then no SDLT is due.

Is SDLT on a lease tax deductible?

Where a trader acquires business premises, however, and pays SDLT on the lease, the tax is a capital item and is only deductible in a chargeable gains computation on the disposal of the premises. Capital gains tax is not itself deductible where the land or interest in land is a capital asset of the business.

What is a surrender premium?

Surrender premium is the term given to the payment that a tenant makes to a landlord when then tenant wants to get out of its lease contract early.

What is commuted rent?

In the context of pensions, the process of giving up a pension in exchange for a lump sum of equal value. The term is also used to describe the conversion of rental payments under leases into a fixed amount.

Is VAT payable on Dilapidations?

“A dilapidation payment represents a claim for damages by the landlord against the tenant’s ‘want of repair’. The payment involved is not the consideration for a supply for VAT purposes and is outside the scope of VAT.”

Is VAT recoverable on Dilapidations?

Currently, dilapidations payments are treated as compensation for damages and so fall outside the scope of VAT. The changes follow several recent judgments by the Court of Justice of the European Union (CJEU) where such payments were held to be part of the supply of services under the contract.