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HMRC internal manual

VAT Transfer of a going concern

Transfers and VAT Groups: Capital Goods Scheme

Where the assets involved in a TOGC have been subject to the Capital goods scheme when owned by the seller, i.e. land or buildings with a tax exclusive value of £250,000 or more and computer equipment, aircraft, ships, boats and any other vessels with a tax exclusive value of £50,000 or more, the purchaser must assume responsibility for continuing any necessary scheme adjustments for any intervals that remain. Further information on this can be found in Notice 706/2 “Capital goods scheme”.

Purchasers should be advised to confirm with the seller whether any of the assets being transferred are covered by the scheme. It is important to be aware that, if the purpose to which the asset has been put changes at or after transfer, the purchaser may need to repay some of the input tax claimed by the original owner. Similarly, he may be entitled to recover more tax than that originally claimed. The contract for sale may entitle the seller to receive from the purchaser all or part of these monies and vice versa. This is more likely where the parties are closely associated. The sums will represent further consideration (or decrease in consideration) for the transfer of the assets and as such will be covered by the original TOGC.