Property deal and transfer of a going concern

Accountants like the transfer of a going concern (TOGC) rules as far as VAT is concerned. The reason – understandably – is because it means that clients can sell assets often for large sums of money without charging VAT. This is particularly helpful for buyers who cannot claim input tax or – equally importantly – cannot fund the cash flow challenge of paying a large amount of VAT to the seller and having to wait up to three months to claim input tax on a VAT return.

If the TOGC conditions are met the sale proceeds are outside the scope of VAT. Further if a property with an option to tax election is included in the deal – which would be standard rated without the TOGC outcome – there is another bonus namely a big saving of stamp duty land tax (SDLT) because this...