Q: We have a rent and repairing lease for which the PCT reimburses us at 107.5%. The 7.5% is the rent and repairing element. The PCT told us it calculates the 7.5% on the rent before, rather than after VAT. Is this correct according to the NHS (General Medical Services - Premises Costs) (England) Directions 2004? Should the PCT also reimburse water rates and landlord's buildings insurance?