What is a Togc property?

In certain circumstances, it is possible to structure a commercial property sale so that it qualifies as a transfer of a going concern (TOGC). Where the TOGC rules apply, the sale of the property falls outside the scope of VAT; this means that no VAT is chargeable.

What is a Togc for VAT purposes?

A transfer of a business as a going concern (TOGC) however is the sale of a business including assets which must be treated as a matter of law, as ‘neither a supply of goods nor a supply of services’ by virtue of meeting certain conditions.

Is a Togc zero rated?

It’s important to be aware that the TOGC rules are mandatory and you should establish from the outset whether the sale is a TOGC . It does not matter if your sale of assets would otherwise be treated as exempt or zero-rated as there can still be a TOGC if the conditions are met.

Can the grant of a lease be a Togc?

Following the results of a recent Tax Tribunal Case, the previous arrangements concerning the treatment of the grant of a lease of a business asset as a taxable supply has changed.

What does Togc stand for?

transfer of a going concern
The phrase ‘transfer of a going concern’ or ‘TOGC’ is widely used in VAT terms but often misused and misunderstood. In this article we set out to clarify the basics of what the term means and when it applies.

What is Togc relief?

If a transaction qualifies for TOGC relief, it is taken outside the scope of VAT so that no VAT is payable. If the buyer itself opts to tax the property and notifies HMRC of that option before the VAT supply is made to the buyer, the buyer gets TOGC relief; no VAT is payable on the purchase price.

Is goodwill a Vatable supply?

Unidentifiable goodwill, valued as the residual difference between the business as a whole and the sum of its identifiable assets, is currently treated as outside the scope of VAT. Normally goodwill is sold as part of the assets of a business transferred as a going concern.

What is the capital goods scheme?

The capital goods scheme (CGS) is a method of adjusting the amount of input tax claimed on the purchase of a capital asset in line with its taxable use over a period of time (depending on what the asset is) of either five years or ten years. The CGS is intended primarily for partly exempt businesses.

How is the sale of goodwill treated for tax purposes?

A sale of personal goodwill, if respected by the IRS, creates long-term capital gain to the shareholder, taxable at up to 23.8% (maximum capital gain rate of 20%, plus the 3.8% net investment income tax) rather than ordinary income to the target corporation, taxable at up to 35% plus an additional tax of up to 23.8% on …

Is the sale of goodwill a capital asset?

Goodwill is an intangible asset, but also a capital asset. The value of goodwill refers to the amount over book value that one company pays when acquiring another. Goodwill is classified as a capital asset because it provides an ongoing revenue generation benefit for a period that extends beyond one year.

Can a sale of a property qualify for a togc?

The sale of a property may qualify for TOGC if the above tests are met. Usually, but not exclusively, a TOGC sale is the sale of a tenanted building when the sale is with the benefit of the existing lease (s) – (the sale of a property rental business rather than of the property itself).

Which is an example of a togc sale?

Usually, but not exclusively, a TOGC sale is the sale of a tenanted building when the sale is with the benefit of the existing lease (s) – (the sale of a property rental business rather than of the property itself). Another example of a property TOGC is where a property under construction is sold (a development business).

When to use togc relief on rental property?

Freehold sale of a partially let property generating no rental income – e.g. because there is a rent-free under the lease. TOGC; total relief available. No rent, but there is a lease; therefore, there is a transfer of a letting business.

What does transfer of going concern ( togc ) mean?

Transfers of Going Concern (TOGC) and commercial property sales When a property is sold with a sitting tenant and is operated as a property rental business (e.g. the sale is going ahead with tenants in place with a current lease), this is known as a Transfers of Going Concern (TOGC) and it is outside the scope of general VAT regulations.