3 Net Media Group v Commissioners for Her Majesty's Revenue and Customs
Decision date: 20 April 2011
Neutral citation: [2011] UKFTT 266 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This appeal concerned whether a September 2007 "sale of assets" for £60,000 + £10,500 VAT was a transfer of a going concern (TOGC) or a VATable supply, and whether the purchaser could reclaim the input VAT. The First-tier Tribunal found the agreement and substance showed a TOGC, so no VAT supply arose and the purchaser was not entitled to reclaim the VAT; HMRC's assessment to recoup the repaid input tax was upheld.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The tribunal applied the parties' agreement and the factual operation of the transaction to conclude that where a sale transfers business assets enabling the buyer to continue the same business, it may be a transfer of a going concern and thus outside the scope of VAT; consequently input tax claimed on an invoice that should not have borne VAT is not recoverable.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The tribunal referred to the practical relevance of HMRC's Public Notice 700/9 criteria—possession and use of assets enabling continued operation, and intention to carry on the same kind of business—as factors informing the TOGC characterisation; also noted that the vendor's insolvency and failure to account for output VAT do not alter the VAT characterisation, though they affect remedies.