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A local water authority owns land that adjoins a farm. The authority wishes to carry out work to its property, which will require access to the farmland. Compensation has been agreed but will this be subject to VAT?
Our clients are a farming partnership. Some time ago the local water authority purchased some land from our clients and equipment relating to the sewerage system was installed on it.
However the water authority now needs to use part of the adjoining land (still owned by my our clients) to enable work to be carried out to the pipework on their property. The pipes also run under our clients’ farmland.
The clients have negotiated compensation of about £10 000 from the water authority for the use of the farmland and the cost of restoring it to its previous condition afterwards. But do they need to charge VAT on that amount?
Readers’ advice on this topic would be very welcome.
Query 18 195 – Pipe Man
Reply from Andrew Rainford
Based on the facts presented Pipe Man’s clients do not need to charge VAT on the...
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