Member Article

Auction sales can raise difficulties when determining whether the transaction is a transfer of a going concern (“TOGC”) as there are two possible situations at which the tax point occurs.

If the deposit is being held as agent then the tax point is from the moment the auctioneer's hammer goes down. In order to qualify as a TOGC, if the seller has waived the exemption to charge VAT in relation to the property, the buyer must have submitted its' own election and notification the day before the auction. If the purchase does not take place, the buyer can revoke the election.

If the deposit is being held as stakeholder then no tax point is created for the purposes of VAT until completion. The buyer therefore needs to ensure that the election and notification is submitted before the date of completion.