Sale of land and buildings does not qualify as a TOGC

The taxpayer spent £870 000 in consultancy fees and two years of management time to gain planning consent to demolish its offices in Middlesex so it could build 213 flats and six houses in its place. It had a small amount of passive rental income from the property but its main activity was to trade as a publisher. It wished to sell the land and buildings to reduce its borrowings.

The land and buildings were sold to PPL in November 2015 for £85m and the sale was treated as a transfer of a going concern (TOGC) on the basis that the taxpayer was transferring both a property development and property lettings business. Without TOGC treatment the sale proceeds would have been standard rated because the taxpayer had opted to tax the site in question. The VAT would have been claimed as input tax by PPL but the...