Transfer of Business Relief (TOB) provisions are aimed at reducing compliance costs for traders. The intention of the relief is to remove from the transferee the requirement to pay VAT on the acquisition of assets to which the relief applies, where he/she would have had an entitlement to deduct some or all of the VAT payable. Where assets are transferred in circumstances where TOB provisions apply it is deemed that no supply has taken place for VAT purposes.
TOB relief can apply to the transfer of property. Revenue published guidance on the application of TOB provisions in July 2018 which includes the following clarifications:
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- A transfer of a property which is subject to an existing lettng agreement, an agreement to lease or an licence to occupy comes within TOB provisions as together those assets are capable of constituting an independent business or undertaking. To that end the transfer of a vacant property will fall outside the scope of TOB.
- The transfer of a property whether or not previously used for business purposes, without any additional assets such as plant, stock, machinery etc. or an existing tenancy/licensing agreement would not fall within the TOB provisions.
- The transfer of a let property without any additional assets to the tenant will be excluded from TOB provisions.
- The transfer of the assets of a lettng business which includes property which is part let, part vacant and part undeveloped, by a single vendor in one transaction to a single purchaser, falls within the TOB provisions.