Crucial lack of equipment

The taxpayer bought a pub in 2005 selling it 18 months later to Claden Ltd for £725 000.

The sale proceeds included £100 000 goodwill value. Claden did not buy any fixtures fittings or equipment which led HMRC to insist the company had not acquired an undertaking that could be operated as a business. (The equipment was sold to the owners of Claden).

The sale could not qualify as the transfer of a going concern and each element – property goodwill and equipment – was subject to VAT.

The taxpayer appealed.

The First-tier Tribunal agreed with the Revenue. The judge found Claden could not operate the property as a pub without equipment regardless of its intention to do so. The sale did not constitute a transfer of a going concern.

The taxpayer’s appeal was dismissed.

Independent VAT consultant Neil Warren said “The inclusion of...