Module 18: Corporation Tax Acquisitions Flashcards Preview

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Flashcards in Module 18: Corporation Tax Acquisitions Deck (8)
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1
Q

When trade and assets of a business are transferred and business is transferred as a going concern (TOGC)

A

Supply is outside the scope of VAT

2
Q

TOGC conditions (5)

A
  • assets are to be used by the purchaser in carrying on the same kind of business as the seller
  • if seller is registered for VAT, purchase must already be/ must immediately become registered for VAT
  • business is capable of separate operation
  • business must be a going concern at the time of transfer
  • no significant break in the normal trading pattern
3
Q

Charging VAT by mistake

A

If seller incorrectly charges output tax, purchase cannot recover from HMRC, must recover from seller

4
Q

Input VAT on professional fees recoverable if

A

Business transferred is among taxable supplies

5
Q

Acquisition of shares advantages (4)

A
  • administratively easier
  • losses carry forward, subject to anti avoidance
  • seller usually entitled to SSE
  • stamp taxes lower if higher L&B
6
Q

Acquisition of shares disadvantages (2)

A
  • buyer inherits any legal/ tax problems of target

- additional 51% group company for buyer

7
Q

Acquisition of net assets advantages (4)

A
  • assets purchased qualify for tax relief for buyer
  • buyer can cherry pick assets and does not inherit history/ liabilities of target
  • TOGC for VAT
  • stamp taxes lower if low L&B
8
Q

Acquisition of net assets (3)

A
  • brought forward losses are sacrificed
  • gains arise in selling company
  • administrative and legal costs higher