VAT alert - Compensation vs Consideration for a supply

Following a couple of European Court of Justice decisions, HMRC have updated their guidance to clarify that these charges will normally be considered as being consideration for a supply and will likely be liable to a VAT charge where there is a direct link between the supply and the amounts paid.  Examples of these kinds of charges could be:

HMRC expect businesses that have failed to account for VAT on these fees in the past to correct these errors, unless they have received a specific ruling from HMRC that their charges can be treated as outside the scope compensation payments. Only where there is no direct link between a payment and a supply of goods or services may ‘compensation’ payments be considered outside the scope of UK VAT. Examples of these could be: