Received a TIA (Tenant Installation Allowance of R1.2), Quote of R1.2 (clearly indicated Vat Excl) was submitted to Lessor who allowed work to continue by supplier, at the end of the project, the supplier provides a Tax Invoice of R1.2 plus Vat, the Lessor now indicates that the allowance of R1.2 implies that this is vat inclusive. what can the supplier now do.
Tried to arrange meeting but the Lessor's Agent is arrogant and does not wish to discuss.
Welcome, thank you for the opportunity to address your question.I need a bit more information in order to provide you with a comprehensive answer:
1. The supplier initailly provided a quote that was more than the TIA amount allowed. This was brought to his attention, the supplier then after negotiations omitted some of the services that brought his quote in line with the TIA allowed and submitted such to the Lessors agents, the quote clearly indicates the amount of R1.2 was vat exclusive. As there was not further response from the Lessors agents and it was deemed that the Lessor had merely agreed with the revised quote, the supplier herafter continued with works.
2. There is no mention of vat inclusive or exclusive wrt the TIA only it states that this amount is R1.2 million only.
3. In the offer to to lease submission or any other documents submitted there is no indication of Vat included in the TIA.
A further two question, please bear with me:
1. The Lessors agent brought this to the attention of the supplier and client and this was negotiated between the client and supplier to omit certain works which brought the quote in line with the TIA.
2. The rental offer quoted is stated as follows: Area of premises X by (Rental amount) plus Vat on the Area.
In terms of the VAT act prices of goods offered to the public do need to reflect a VAT inclusive price and also indicate the value of VAT contained in the price.
In this instance the quantum involved is not a consumer price, but a budget allowance agreed between VAT vendors. The industry practice may also be taken into account where VAT exclusive prices are quoted for the reason that VAT is mostly transparent to vendors unless there are exempt supplies. VAT in these instances does not form part of underlying prices and is also accounted for and cost accounted separately.
The fact that the rental was quoted on a VAT exclusive basis, illustrates this point and creates a reasonable representation that other figures and allowances quoted as part of the transaction are on the same basis unless the contrary is clearly expressed. The lessee, it appears, has relied on this representation. Furthermore the lessor by way of it's agent had intervened when a quotation exceeded the allowance but did not do so when the quotation excluding VAT was equal to the budgeted allowance; raising an objection once the work had been completed.
The lessor or lessee may argue that as the TIA was vague, there was no agreement on material terms regarding occupation and fitment of premises and therefore no contract of lease came into being, in which case there would be a potential for wasted TIA costs and a dispute may well arise in that regard.
I trust the legal information and perspectives provided are helpful in assessing your position. I am always happy to clarify any aspect of my answer.
B.Com LLB Registered Corporate lawywer
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