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HMRC internal manual

VAT Transfer of a going concern

Land and Property: Notification on or before relevant date: notification that the disapplication test does not apply

The transferee’s notification is that he will not use the property to make supplies that are exempt as a result of his option having been disapplied by paragraph 2(3AA) of Schedule 10. Article 5 does not specify what form the notification must take but it is in the seller’s best interest to ensure that the notification is unambiguous.

A seller who fails to obtain the notification and does not charge VAT will be liable to HMRC for output tax. Where the seller has received a notification and complied with all other TOGC requirements he is entitled to treat the sale as a TOGC. If it is subsequently found that the notification is incorrect, we should not seek to recover output tax from him unless he had been complicit in the incorrect notification.

A brief transitional period between 18th March 2004 and 31 May 2004 was allowed where there had been a TOGC, which included a new or opted property but where no notification had been made. Customs agreed to consider cases sympathetically where:

  1. the transaction had been treated as a TOGC by both parties; and
  2. both parties agree that it should remain treated as a TOGC; and
  3. the new TOGC requirements would have been met had the correct notification been given.

If any such cases are identified they should be referred in writing to the Property VATTeam, CT & VAT.