The transfer of a business between legal entities is generally treated as the 'transfer of a going concern' (TOGC). In such cases, the transfer is ignored for VAT purposes as if there is no supply when the assets are transferred. Hitherto, HMRC did not accept that the transfer of a business in or out of a VAT group could qualify as a TOGC where the business was conducted solely within the VAT group. The case of Intelligent Managed Services Ltd challenged that view at the Upper Tribunal and the company was successful in its appeal.

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Summary
The transfer of a business
between legal entities is generally
treated as the 'transfer of a going
concern' (TOGC). In such cases,
the transfer is ignored for VAT
purposes as if there is no supply
when the assets are transferred.
Hitherto, HMRC did not accept
that the transfer of a business in
or out of a VAT group could
qualify as a TOGC where the
business was conducted solely
within the VAT group.
The case of Intelligent
Managed Services Ltd
challenged that view at the Upper
Tribunal and the company was
successful in its appeal.
28 August 2015
Have you paid too much Stamp Duty Land Tax?
Following the Upper Tribunal's judgment in Intelligent Managed Services Ltd, businesses
need to question whether they have paid too much Stamp Duty land Tax (SDLT). In that
case, a VAT group acquired a stand-alone business which, after the transfer only provided
services to other members of the VAT group. HMRC took the view in that case that , as
there were no supplies made by the acquired business to customers outside the VAT
group, the assets of the business were not being used by the acquirer in carrying on the
same kind of business as that of the transferor.
The Upper Tribunal has allowed the taxpayer's appeal. What matters is that the business
previously carried on by the transferee has continued after the date of the transfer (albeit
wholly within a VAT group). The fact that the only supplies made by the business were
within a VAT group (and were, thus, disregarded for VAT purposes) was irrelevant.
HMRC has confirmed that it is not to appeal this judgment. As a consequence, the law
relating to TOGC's has now been clarified.
Where a business has acquired a property as part of a TOGC, HMRC's former policy may
have led to an overpayment of SDLT. In cases where a property letting business has been
or is to be conducted solely within a VAT group (ie where a landlord and tenant are
within the same VAT group) the transfer of the business by the landlord to a third party
may not have been treated as a TOGC. This may have led to VAT being charged on the
transfer of the property with SDLT being payable on the VAT inclusive purchase price.
In such situations businesses should consider submitting a claim for overpaid SDLT.
Such claims should ideally be made within twelve months of filing the SDLT return by
amending the return. Based on HMRC's practice following the Robinson Family case, it
may also be possible to submit a claim for repayment of SDLT within four years of the
effective date of the land transaction.
VAT: Transfer of a Going Concern
VAT Alert
Contact
Stuart Brodie Scotland stuart.brodie@uk.gt.com (0)14 1223 0683
Karen Robb London & South East karen.robb@uk.gt.com (0)20 772 82556
Andrea Sofield London & South East andrea.sofield@uk.gt.com (0)20 7728 3311
Mike Dalton Milton Keynes mike.dalton@uk.gt.com (0) 1908 359506