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A landlord of industrial premises asks whether they must pay the VAT on rents for a premises that has been judicially closed, where the tenant will pay in instalments at a later date. The DGT rules that the tax liability arises when the rent becomes due, regardless of whether it has been collected.
Landlords must account for VAT based on the accrual of the debt (when it becomes due) rather than the actual cash flow, which may create liquidity challenges if rents are unpaid.
The tax team reviews your specific situation.
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