VAT Flashcards
TOGC
relief
when conditions
Relief - if business transfered as going concern - no output tax charged as no supply of taxable supply of goods and services
When
Sale of business to 3rd party
Incorporation
Sale of tenanted building if certain conditions met
Tfres of assets within VAT group - trfer disregarded for VAT purposes anyway so TOGC not conisdered
CONDITIONS:
All of following
transferor must- 1) trfer whole of business or a part of a capable separate operation 2) be VAT registered
Transferee must - 1) carry on same type of business as trferor 2) be VAT registered or immediately become liable to be reg for VAT 3) have no sufficient break in trading
Incorrect application of TOGC
a) VAT charged in error where TOGC should have been applied
i) trferee not entitled to reclaim it as input tax - as not properly charged
ii) may be able to recover from trferor
b) VAT not charged where should have been as TOGC not met
i) price paid for asset is VAT inclusive
ii) trferor may be assessed to VAT
iii) if contract price is VAT exclusive and VAt may be chargeable - in theory can recover from trferee (practical issues in recovering additional sums after transaction concluded)
Trfer of VAT reg number
trferors VAT number can be trfered to trferee
outstanding VAT liabilities and records also trfered along with eligibility for bad debt relief on the treferors bad debts
may be useful where trferor and trferee closely connected
L+B and L+B rental properties
L+B
special rule for TOGC - will not cover :
buildings aged 3 years or less
L+B which trferor has opted to tax
(unless trferee opts to tax these assets)
if treferee doesnt make OTT then VAT charged (may not be recoverable for trferee)
L+B rental properties
building generating rental income and capable of independant operation constitutes a business
sale qualifies as TOGC:
less than 3 years old
OR
Vendor has opted to tax the building
then purchaser needs to opt to tax building otherwise VAt charged on sale of the building
Interaction between TOGC and capital goods scheme
CGS item trfered as part of TOGC
No sale adjustment for vendor
Purchaser continues to apply CGS for remainder of 10 or 5 year adjustment period
OTT, TOGC and CGS
if property is <3yrs old or OTT has been exercised - VAT charged unless purchaser OTT
If purchaser OTT:
a) no VAT charged
b) CGS transfers (if exempt trader purchases will need to repay input tax as part of remaining CGS)
If purchaser does not OTT:
a) VAT charged
b) recoverability depends on type of supplies made by purchaser; and
c) CGS does not transfer
see pg 113 for diagram
Stamp taxes - transfers between groups
relief for SD available on certain intra group trfers of shares
relief will be given where loss group definition met (75%)
SD relief denied once winding up has commenced
trfers of assets in consideration of SH’s rights in a liquidation are exempt from SD providing SH does not take over any liabilities of liquidating company
SD - Transfer of securities to connected companies
targeted anti avoidance rules apply
where LISTED shares/securities are trfered between connected parties - SD/ stamp duty reserve tax payable higher of:
Actual consideration
MV
Connected = under common control
Rule also applies where unlisted shares and securities are transferred to a connected company, but only where consideration includes the issue of NEW shares
Group relief from SDLT
exemption from SDLT on trfer of land between members of a group of companies
exemption does NOT apply if - at time of trfer - arrangements in place for trferee company to leave the group
SDLT will be charged retrospectively on MV of land on the date of trfer if trferee company leaves the group within 3 years while still owning the land trfered
SD on
incorp
liquidation
purchase of own shares
Incorp
SD
- not payable on new shares issued
SDLT
charged based on MV of L+B trefred to new co
Based on combined MV of all L+B trfered
If trfer is TOGC: % x consideration at MV (with no VAT)
If trfer is not TOGC: % x VAT inclusive consideration at MV
LIQUIDATION
SD - not charged when shares cancelled
SDLT - not on land trfered to SH’s unless consideration given
PURCHASE OF OWN SHARES BY A COMPANY
SD:
SD charged on repurchase price unless:
- Redemption of redeemable shares; or
-Capital reduction or court scheme of arrangement
Stamp tax anti avoidance
ATED
Annual Tax on Enveloped dwellings:
Applies to - Owners of interest in indiv dwelling worth >500k, where
Owner = company, collective investment scheme or partnership where at least one of the partners js a company or collective inv scheme
Charge - Annual charge (1 April to 31 march) based on MV of property on latter of 1 April 22 or acq date
Rates in tax tables
if property acq or sold part way through year - pro rate charge based on days owned
Reliefs which eliminate charge:
Properties exploited as part of rental business
Property devs and traders
Anti Avoidance
higher rate of SDLR for trfers to companies
where an interest in single dwelling sold for consid over £500k
SDLT 15% if buyer is:
company
partnership where at least one partner is a company
A collective investment scheme
Anti Avoidance
Non resident surcharge
additional 2% SDLT applied to purchase of residential prop - where purchaser non res indiv,company or partnership
Non res co either:
Non res in CT act
UK res under CT act but close company controlled by non uk res
NRS not apply to purchase of certain short or low value leases
applies on top of 3% charge for additional properties and 15% on companies buying high value dwellings]
SD Anti avoid
Linked transactions and purchase of multiple dwellings
where trasnactions linked i.e. purchase of block fo flats
SDLT rates applicable to total consideration
reliefs:
- If any non residential prop included in linked transactions, non residential rataes apply tot total consid (2% surchage for non res cannot apply)
- Non res rates may also be applied to total consid where 6 or more residential properties are acquired in single transaction
- Trasnactions prior to 1 June 24 where more than 1 resi prop acquired, purchaser could claim multiple dwellings relief
SDLT rates to average price per property x properties acquired
minimum overall rate 1% of total consid
2% non res surcharge could apply as resi property rates used
cannot be claimed for transactions on or after 1 June 24
