Manage arrears and debt

Are you utilising the Government's VAT deferment scheme and proactively engaging with sub-tenants to maximise cash flows and protect value?


  • Have you investigated taking advantage of the Government's VAT deferral scheme?
  • Have you reviewed the trading status of impacted properties in terms of VAT?
  • Have you tailored debt collection for tenants with an ability to pay, working in partnership to achieve best outcomes?
  • For tenants that genuinely cannot pay, have you considered formalising payment plans or regearing leases so that value lost from a rent-free period can be recuperated through a longer length of contract?
  • Do you have plans to work with impacted tenants up-front so that there is an action plan for any future lockdowns?


All UK VAT registered business have the option to defer payment if they have a VAT payment due between 20 March 2020 and 30 June 2020. The deferred amounts are due on or before 31 March 2021. This should assist with cashflow management in the short term.

In the context of changing space requirements, there needs to be a more strategic approach to identifying surplus estate as a source of cost containment or generating income. Subletting property can help to provide cashflow and offset liabilities, but it also adds a new layer of responsibility, as a landlord. The surplus estate requires active asset management through rigorous credit control, optimising leases and proactively engaging with tenants. These can be key in mitigating costs.

Where buildings have been opted to tax, the rent demand will have VAT applied and hence VAT would be due to HMRC. This can cause short-term cashflow issues if the rent is paid late or appears unlikely to be paid at all. Therefore, a considered approach needs to be applied in terms of the timing of the issuing of the rent demands.

Risks and issues arising out of sub-tenants’ inability to pay can be managed by considering together a range of available levers such as rent-free periods coupled with lease extensions - value lost from a rent-free period can be recuperated through a longer length of contract. For any new leases, consider adding provisions to deal with ‘force majeure’ situations.

We have extensive experience of working with corporate occupiers to manage both their occupied and surplus estates in terms of portfolio optimization for cost reduction, rent/debt collection. We have deep experience of identifying a range of pragmatic strategies to resolve issues with tenants who are facing payment difficulties. Our Property Management team can also provide the short-term resource capacity and capability needed to deliver these strategies.

For more information please contact:

Richard Watterson Director Corporate Solutions