White
| Jurisdiction | UK Non-devolved |
| Judgment Date | 06 March 1998 |
| Date | 06 March 1998 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
Transfer of business as a going concern - Decision on preliminary matters - Sale of public house where vendor had elected to waive exemption - Whether election attached to goodwill to land - Whether fixtures or fittings covered by the election.
The hearing was to decide two preliminary matters: (1) whether on the transfer of a business as a going concern the goodwill and fixtures and fittings formed a part of the land covered by an election to tax and (2) whether the election extended to the whole of the land or part.
The appellant (Mrs W) bought a two-storey public house plus car park and garden known as the "Dog and Duck" and conducted a public house business there. The sellers, Dunnings Mill Ltd, had elected to waive exemption from tax describing the property to which the election related as the "Dog and Duck". Prior to the sale a living-in manager employed by a company called Planet Inns Ltd had occupied at least two of the upstairs rooms. After the sale Mrs W's manager occupied the same two rooms. No VAT charge was made by Dunnings Mill Ltd on any part of the sale price. Subsequently Mrs W sought to recover input tax on the VAT ingredient in the sale price. Customs issued an assessment for £12,250 to recover input tax credit previously given. The appellant appealed. Mrs W contracted to buy the premises together with goodwill and fixtures and fittings. The aggregate consideration was £140,000 of which £7,000 was allocated in the contract to goodwill and £8,000 to fixtures and fittings. At the time of Mrs W's acquisition, the Dog and Duck was run as a public house. It was a two-storey building standing in its own grounds, the downstairs of which consisted of one large bar area, a "restaurant", a kitchen and toilets. The first floor consisted of an office, a bedroom, a bathroom, a living room and a toilet. Until Mrs W took possession of the Dog and Duck it was occupied by Planet Inns Ltd and was managed by an employee of that company who slept upstairs. Mrs W engaged her uncle as a manager and he also slept upstairs.
Mrs W contended that, once she took possession of the Dog and Duck, she had had to start "from scratch". She had changed the sign and the logo. She had entered into a supply agreement with a new brewer. The two Planet Inns Ltd staff left when she took over. Since the transfer, Mrs W had signed no election to waive exemption in relation to the land and buildings comprised to the premises. No VAT was charged by the vendor on any part of the sale price because, presumably, the contract was drafted on the understanding that the business was being transferred on a going concern basis. On 4 April 1996, Mrs W submitted a return for the 3/96 period claiming a net repayment of £18,883. She had claimed £20,851 input tax in respect of the purchase of the premises fixtures and fittings and goodwill. A Customs officer visited the premises to verify the claim and following that visit the commissioners wrote to Mrs W indicating that the...
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