In this month’s VAT Q&As, Julie Green, VAT consultant at CCH Consultancy, considers transfer of going concern issues for a freehold purchase and the flat rate scheme for pubs
TOGC: Transfer of going concern in freehold purchase
My client purchased the freehold of a tenanted commercial property five years ago for £550,000. The seller had opted to tax (OTT) the property and so my client also OTT the property and provided the necessary anti-avoidance declaration so that the sale could go through without VAT being charged as a transfer of a going concern of a property rental business (TOGC).
The tenancy agreement has now come to an end and my client has found a buyer for the property. However, the purchaser has advised him that he cannot charge VAT as they intend to convert the building into flats and have issued a VAT 1614D certificate. Is this correct and what are the implications?
