A transaction which qualifies as a transfer of a going concern (TOGC) can produce savings in cashflow and SDLT. It is therefore a valuable tool in appropriate planning. The sale of a business is often achieved via the sale of the assets, rather than shares in a limited company. The sale of assets is frequently chargeable at the standard rate. At best, a VAT-registered customer will recover this as input tax. At worst, SDLT is charged on theVAT-inclusive price of a property which is under an option to tax and an exempt purchaser will be unable to recover the input tax. If the supply of assets qualifies as aTOGC, however, it is converted into a non-supply forVAT purposes: noVAT will be charged and SDLT will therefore be based on a lower value. Putting a TOGC into practice, however, is where the difficulty often lies.
Kevin Hall looks at implementation and current issues for De Voil Indirect Tax Intelligence – click here for the full article Transfer of a going convern (TOGC) – De Voil Indirect Tax Intelligence.