We do not really act in the field of VAT but we have a client who is buying a business in a rented property. We want this deal to happen as a TOGC.
The seller informs us that she will have to surrender the lease back to the landlord who will then issue my client with a new lease.
Will this render the deal not a TOGC?
Thanks in advance
Alan
Replies (2)
Please login or register to join the discussion.
HMRC guidance says
If the building has a tenant and the property is sold with the lease still in place, then the "business" is transferred so assuming the buyer is VAT registered then TOGC should apply.
HMRC specifically give an example where there is an existing lease and the lease is surrendered immediately before the sale, HMRC state that this is NOT a TOGC because the property rental business ceased when the lease was terminated.
The same applies if a sitting tenant buys the property that they rent, because the tenant cant carry on the same business of property rental.
We have a client in a similar situation and we are having great difficulty getting away from the VAT because the property has been empty for at least 12 months.
Depends..
Depends on whether your question is about a trading business TOGC, or a property letting TOGC. And also on whether there is, potentially, VAT on the property element of the transfer.