The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This guidance note provides an overview of the CGS implications of the following transactions:
transfer of assets as part of the transfer of a business as a going concern (TOGC)
disposal of a capital item
VAT group implications
This note should be read in conjunction with the Introduction to the capital goods scheme and Capital goods scheme ― intervals and adjustments guidance notes.
See ‘How to apply the Capital Goods Scheme’ by Jackie Yarrow in Tax Journal, Issue 1053, 20 (15 November 2010).
If a business transfers a capital item as part of the TOGC, it will need to give the purchaser details of the capital item. The purchaser will be required to continue to make any further adjustments due in respect of the capital item for the remaining intervals.
The following implications need to be considered by the parties involved in the TOGC.
If the purchaser decides to keep the existing VAT registration number, the following applies:
the adjustment interval in which the business is transferred continues without a break
the seller is not required to make any CGS adjustments for that interval
the purchaser is responsible for completing the CGS adjustment calculation for the whole of that interval. The interval ends on the last day of the transferee’s longer period ending immediately after the transfer (or if no longer period then applies, on the last day of the transferee’s tax year following the day of transfer). The transferee must make any adjustment for that interval and any remaining intervals in the normal way. Longer periods and tax years both normally run to the following 31 March, 30 April or 31 May depending upon the owner’s VAT periods.
the purchaser is responsible for continuing to make any future adjustments required in respect of that asset for the remaining intervals
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