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.

Best regards,