On the date of the referendum announcement, HMRC released an important long awaited business brief on TOGCs which clarifies and extends the treatment of TOGCs and makes it possible to TOGC certain sales which previously were thought to be standard rated.

This all follows the case of Intelligent Managed Services Limited.

Members of a VAT group are generally treated as one person for VAT and the pre-Intelligent Managed Services logic was (applying this to property deals) that if the tenant is in the same VAT group as the landlord the sale of the freehold could not be a TOGC. This logic has now been reversed. If the only reason previously for TOGC treatment to be scuppered was a VAT group between landlord and tenant it can now be treated as a TOGC. It must be intended that the lease should continue in existence, at least for a short while.

This applies both where the landlord and the tenant are currently inside a VAT group and where post-sale they will be in a VAT group.