Readers’ forum: VAT on contribution to costs?

One of my farmer clients is hoping to sell some land with planning permission for housing to a national developer. He has agreed a contract with a land promoter that means the promoter will get 15% of the future sale for both obtaining planning permission and negotiating a contract with a developer. My client will receive an annual fee of £5 000 from the promoter to help with costs he incurs and also to compensate him for the inconvenience caused by the fact that the promoters will need access to his land. Is this fee subject to VAT? My client has not opted to tax the land at the moment.

To his shock my client has learned that he will incur initial legal and professional fees of £10 000 plus VAT from third party businesses – including my own firm and a ground testing business – to ‘get the...