In the 2004 budget HM Customs & Excise announced a measure aimed at cracking
down on VAT avoidance schemes using the Transfer of a Going Concern ("ToGC") rules.
However, they did not widely publicise the details of this measure and it has become
clear that this measure is a major and important change. The measure will affect all
ToGCs that include a commercial property on which the vendor has made an Election to
Waive Exemption (Option to Tax) or where the property is less than 3 years old.
Purchasers must notify the vendors that, following the transfer, the purchaser's
option to tax will not be "disapplied".
If the purchaser cannot, or does not, make such a notification the property must
be excluded from the ToGC treatment and VAT Charged.
Until 31 May 2004 HM Customs & Excise will allow ToGC treatment to apply where
a notification has not been made provided the purchaser could have made such a notification.
The inference in such wording is that after 31 May 2004, if the purchaser does
not make a Notification, the ToGC treatment will not apply to the building, even
where the purchaser's option to tax is not disapplied.
Ensuring the issue of the notification by the purchaser must become part of your
standard procedures in all such cases.
If you require further information please contact us on 0121 778 4299.
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current developments. No liability is accepted for errors, omissions or opinions
it contains or for any reliance placed on this newsletter. This newsletter is intended
for general guidance only. No responsibility for loss occasioned to any person
acting or refraining from action as a result of any material in this publication
can be accepted by the authors or publishers. On any specific matter, reference
should be made to the appropriate advisor.
© Copyright 2004 VATease Ltd
