Jurisdiction(s):
United Kingdom

Key definition

Costs definition

What does Costs mean? In litigation, costs are the legal fees, disbursements, court fees and VAT incurred in bringing, defending or appealing a claim, and the sums a court or tribunal may order one party to pay another for those liabilities. The concept is governed by procedural rules and case law rather than a single statutory definition: England and Wales (CPR 44–47), Northern Ireland (RCJ Ord 62), Scotland (where the equivalent term is expenses), and Ireland (Legal Services Regulation Act 2015 and the Legal Costs Adjudicators). The general approach is broadly consistent, subject to local terminology and procedure. Typical features include the discretionary rule...

UK VAT on granting and managing leases: option to tax, timing, tenant recovery, inducements and rent-free periods, rent payment, landlord’s costs, variations, defaults, and VAT clauses

Published by a LexisNexis Tax expert

Practice notes

This Practice Note sets out the VAT matters to address when granting a lease and during an ongoing lease.

whether VAT is payable
when it becomes due
the tenant’s position on recovering VAT
inducements
payment of rent
the tenant paying the landlord’s Costs
changes to the lease
tenant default
which VAT provisions ought to be included in the lease

For the VAT points to consider where a lease is assigned or brought to an end (including by surrender), see Practice Note: VAT issues for lease assignments and terminations.

Is VAT chargeable?...

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Martin Scammell

Martin Scammell is an independent VAT consultant, specialising in property and construction matters, who works with tax departments in major corporates and universities, and with a number of law and accountancy firms. He is the author of the leading reference work on VAT and property.Martin started out in VAT Policy in Customs & Excise, was a Partner at Ernst & Young, where he headed up the VAT real estate group, and then became head of indirect tax at Eversheds.He has been involved in the development of VAT legislation and policy over many years, and regularly serves on working parties established by HMRC. He was a member of the Office of Tax Simplification’s consultative committee for their review of VAT in 2017, and in 2018-19 of HMRC’s external stakeholder group considering the proposed reverse charge for building work. Martin currently works with HMRC as...

Web page updated on 22/05/2026

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