In Deezer Limited v HMRC [2017] TC05691 the First-tier Tribunal (FTT) found that taking out a lease on premises amounted to a TOGC for the pruposes of compulsory VAT registration under s49 VATA 1994.
- The premises had been used as a fish and chip for many years.
- They were sold to a new owner in June 2015, who then entered into a lease with the taxpayer shortly afterwards.
- The taxpayer argued there was no TOGC: he had simply entered into a lease with the new owner, who had not run the previous business.
The FTT agreed with HMRC that there was a TOGC:
- The taxpayer obtained the lease for the premises including fixtures and fittings: at that point they were in a position to run exactly the same type of business as before.
- The taxpayer used the same name, premises and equipment as the previous business at the site: it was fundamentally the same business.
- The goodwill and customer base clearly went along with the premises.
- There was no evidence of a break in trading other than a brief period to purchase new stock.
Links
Our subscriber guides:
VAT traps on taking over a business
Transfer of a going concern (TOGC)
Case
Deezer Limited v HMRC [2017] TC05691
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