8 Dec 2021
Where the sale of a business includes assets and meets certain conditions, the sale will be categorised as a TOGC. A TOGC is defined as ‘neither a supply of goods nor a supply of services’ and is therefore outside the scope of VAT. This is great news, because under the TOGC rules no, VAT would be chargeable on a qualifying sale. This can often be a huge relief for the Buyer, as they are no longer required to fund the VAT element of the purchase.
All the following conditions are necessary for the TOGC rules to apply:
The TOGC rules can be complex, and both the vendor and purchaser of a business must ensure that the rules are properly followed. The TOGC rules are also mandatory which means that it is imperative to establish from the outset whether a sale is or is not a TOGC. For example, if VAT is charged in error, the buyer has no legal right to recover it from HMRC and would have to seek to recover this ‘VAT’ from the seller.
The Annual Investment Allowance (AIA) is a generous tax relief that was first introduced in 2008.
From 6 April 2022 the dividend tax rate increased by 1.25%