Commentary

V7.179 Transfer of a going concern—property rental business

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.179 Transfer of a going concern—property rental business

Part V7 Tax planning | Commentary

V7.179 Transfer of a going concern—property rental business

A situation that has become quite common in recent years has been where a property has been sold by the owner of the freehold to a third party – but with the benefit of an existing lease in place with a tenant or tenants. In these situations, the sale can qualify as a transfer of a going concern (sale of a property rental business).

However, if the seller has opted to tax the property in question, then the buyer must also elect to tax the property before a tax point arises (complete Form VAT 1614A). If an election is made, a VAT charge can be avoided. A tax point in relation to a property transaction can arise upon the payment of a deposit (see the case of the Higher Education Statistics Agency Ltd v C & E Comrs ([2000] STC 332)).

Note – the rules concerning transfer of a going concern and property can be quite complex. For example, a challenge can occur when a seller is transferring a block of

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial