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Can the transfer of a going concern rules apply if connected parties are involved?
A client is buying the freehold of a commercial property in partnership with his wife. The existing owner has rented out the property for many years to three separate commercial tenants (one on each floor) and has an option to tax in place.
However one of the tenants is a trading business that is wholly owned by my client (100% share capital) and makes exempt supplies only. All three tenants will remain in the building after its sale earning my client rental income of £40 000 a year. The cost of the property is £400 000 excluding VAT.
Ideally my clients would buy the property as a TOGC (transfer of a going concern) to avoid a VAT charge which they can do as long as they are VAT registered and also opt to tax the property.
However as I understand it there is...
