TOGC ― other related issues

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note looks at a number of issues associated with transfers of going concerns (TOGCs), specifically:

•
the capital goods scheme (CGS)
•
VAT registration entitlements / obligations
•
VAT numbers
•
transferring VAT records
•
VAT groups

For an overview of TOGCs more broadly, see the TOGC ― overview guidance note.

In-depth commentary on the legislation and case law can be found in De Voil Indirect Tax Service V2.226.

How does a TOGC impact on capital goods scheme obligations?

The CGS is covered generally in the Capital goods scheme (CGS) ― overview guidance note. Broadly, it provides that for certain ‘capital items’, it’s necessary to monitor ‘use’ over a period of time to ensure that the VAT recovery initially obtained reflects the actual use of the item over a period of time. For example, if a business bought a building from which to make fully taxable supplies, it could recover input tax in full. However, if the next year the business model changed to fully exempt, the full VAT recovery wouldn’t

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