VAT on reverse premiums & dilapidation payments

An inducement or incentive made by a landlord to prospective tenants for entering or renewing a lease (ie, a reverse payment) is not in itself a supply unless the tenant does something beyond simply entering into the lease. Dilapidation payments are outside the scope of VAT. However, if the lease is exempt the corporate occupier should consider undertaking the works rather than paying the landlord.