Treatment of landlord payments to tenants should be simplified, says CIOT

Tax deductions made on payments by landlords to tenants for construction works on properties should be outside the scope of VAT says the Chartered Institute of Taxation in its response to the consultation on reforming the construction industry scheme (CIS).

The scheme can also cover payments made by landlords to tenants to carry out building works often in connection with repairs or improvement works ahead of the grant of a new lease. Landlords often make payments to tenants to carry out works in non-construction sectors such as hospitality or retail where tenants are undertaking work at the same time to finish a building or to fit it out to their own needs.

This is a ‘sustainable approach’ said Colin Ben-Nathan chair of the CIOT’s employment taxes committee. ‘However at the moment it does mean that a tenant whose...