The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.
This guidance note looks at a number of issues associated with transfers of going concerns (TOGCs), specifically:
the capital goods scheme (CGS)
VAT registration entitlements / obligations
transferring VAT records
For an overview of TOGCs more broadly, see the TOGC ― overview guidance note.
In-depth commentary on the legislation and case law can be found in De Voil Indirect Tax Service V2.226.
The CGS is covered generally in the Introduction to the capital goods scheme guidance note. Broadly, it provides that for certain ‘capital items’, it’s necessary to monitor ‘use’ over a period of time. To the extent that the use of the capital items changes during that period, it will be necessary to make adjustments to VAT recovery (CGS adjustments).
If a capital item is transferred as part of a TOGC, the new owner will be required to take over the CGS adjustments for any remaining intervals. Purchasers therefore must confirm with the seller whether any of the items are capital items for the purposes of the CGS. If this is the case, the seller must provide the purchaser with details of adjustments undertaken to date.
The detailed provisions are described in the Capital goods scheme ― transfers, disposals and VAT groups guidance note.
There may be VAT registration implications for both the buyer and seller arising out of a TOGC. Registration is covered generally in the Overview ― registering for
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