On 21 August 2014 the First-tier Tribunal held that an acquisition by a company of assets of a law firm, not including employees and clients, was not a TOGC.

The decision serves as a reminder that, for TOGC treatment to apply, the ‘essence’ of a business must be transferred. What amounts to the essence of a business will, of course, depend on the particular nature of the business concerned. In the present case, the business of a solicitor was considered to be the taking of instructions from clients, and then advising the clients as to the law applied to the particular facts. Once the employees and clients were stripped out, all that remained for the purchaser to acquire were the recoverable fees for the firm’s prior work. The purchaser therefore could not have intended to use the assets to carry on the same kind of the business as the law firm.

To view the decision, click here.