HMRC’s policy must be scrutinised, says Graham Elliott
Subject to conditions transfers of going concerns (TOGC) are not treated as supplies for VAT. This includes a transfer of a property asset which supports a property rental business. HMRC’s policy is that TOGC treatment applies to the whole property transfer even where only part of the building is let and where there is no intention to let the remainder.
A property can mainly be occupied by its purchaser which may be unable to reclaim VAT but none of the purchase is subject to VAT if part is sublet. By contrast purchasing a property which is under the option to tax and where no tenants are involved creates irrecoverable VAT.
Despite this being its policy HMRC regretted the consequences in the...
