On 24 June 2016, HMRC published Revenue & Customs Brief 11 (2016) in light of the Upper Tribunal’s decision in Intelligent Managed Services Limited3. See here for our commentary on the Tribunal’s decision.

HMRC has now accepted that transfers of businesses into VAT groups can qualify as TOGCs provided:

  • the transferee company intends to continue to use the transferred assets in operating the same kind of business as the transferor, but to other group members, and
  • the other VAT group members use the services to make supplies outside of the VAT group.

HMRC has also confirmed it is changing its policy on business transfers out of a VAT group. It will no longer be the case that such transfers are automatically denied TOGC treatment.

Finally, the Brief sets out HMRC’s views on voluntary VAT registrations for non-established transferees. In order for TOGC treatment to apply, it is HMRC’s view that voluntary registration must be in place at the date of transfer.

The Brief can be viewed here.