Togc Agreement
Even if the lease had been linked to the actual completion of the sale, what about Coleridge`s attempts to market the property to other tenants? Given that the college wanted to occupy the building itself, it is questionable whether Coleridge continued this aspect of his business after exchanging contracts to sell the property to the college. However, in HMRC`s action, UT opposed the FTS, distinguishing between a genuine transfer of leased premises (even if the lease had not yet been concluded or the rent paid) and an agreement concluded in the context of a sale aimed at minimising VAT. The UT stressed that when deciding whether a part of a company has been transferred, all circumstances that might include the intention of the parties must be taken into account. In this case, the lease flowed directly from the sales contracts and was only part of the sales contracts and was not part of Coleridge`s business. The decision seems to be the right one. However, if you advise in a similar situation, remember that this case seemed to change the terms of the condition in the lease. If it had been conditional that the sale to the college was actually completed, it might not have been a TOGC. Coleridge agreed to sell Theobalds Road to the college. BAPM wanted to move with the college and remain its tenant, so Coleridge and BAPM made an agreement to rent a room in the property.
The agreement was conditional on Coleridge`s exchange of contracts to sell the property to the college. The sales contracts were properly exchanged and concluded, and the college granted the lease to bapm. Unlike other civil courts, under Czech law it is possible to transfer all company assets and all rights and obligations relating to the assets, including contracts, real estate, computer licenses and intellectual property rights, through a single written agreement. The conditionality of the lease did not matter, since the agreement became unconditional when exchanging sales contracts, that is, before the property was transferred to the college after graduation. If the college had not graduated, BAPM could still have asked Coleridge to grant the lease. The following notice of agreement is optional and other clear written evidence of consent will be accepted by HMRC. The seller, buyer, beneficial owner and nominee must each keep a copy of all written evidence. One of the main advantages of a TOGC is that, unlike the sale of individual assets, the transferor does not need to obtain the consent of a third party when transferring contracts. All contracts relevant to the company are transferred through the agreement via the TOGC. The new voluntary practice allows a person who transfers a share of land to a designated beneficial owner, with the consent of that designated beneficial owner and the beneficial owner, to treat the designated beneficial owner as the acquirer in order to determine whether a transfer of a continuing business has occurred. Paragraph 8.2 provides an example that you can use to register the agreement.
An important part of the argument in Dartford was that a tenant has a reasonable interest in the property under a rental agreement and can request specific performance of the agreement. In this case, BAPM acquired this stake before the ownership was transferred to the college. However, if the lease had been linked to the actual completion of the sale, BAPM would never have acquired its fair share as long as Coleridge owned it. HMRC`s argument that BAPM was never part of Coleridge`s business would have been much stronger. HMRC argued that the sale was not a TOGC because Coleridge did not operate a real estate leasing business that could be transferred to the college. According to HMRC, BAPM was not really part of Coleridge`s business and could never be due to the conditionality of the lease agreement. As far as formalities are concerned, an agreement on a TOGC must be approved by the general meetings of the seller and the buyer. Signatures on the agreement must be notarized (and apostilled, depending on the country in which the agreement was signed) if the real estate is also the subject of the transfer. The court was therefore unable to distinguish this case from Dartford Borough Council, another case in which the seller entered into a lease before a sale but did not grant the lease. The sale of Dartford was treated as a TOGC.
In practice, whenever the transfer of a Czech company is part of an international company, it is customary to execute a local business transfer deed under Czech law. The reason for this practice is that the agreement on the basis of which the company is transferred must be submitted to the collection of documents kept by the Czech Commercial Register and published. You need to check if the person buying your assets intends to run the business in the same way as you. For example, you can include a warranty on the buyer`s intentions in the purchase agreement. By means of an agreement on a TOGC, the purchaser acquires the debts that were or should have been known to him, taking into account the nature of the company. The Upper Tribunal (UT) dismissed HMRC`s appeal against the decision of the First Tier Tribunal (FTT) in HMRC v Royal College of Paediatrics and Child Healthcare & Coleridge (Theobalds Road) Limited and another [2015] UKUT 0038 (TCC) on the grounds that HMRC was not in time to carry out the assessment. However, on the substantive issue, UT agreed with HMRC that the transfer of a company as an operating business (TOGC) should be refused in a land sale if (i) the tenant has been presented to the seller by the buyer and (ii) the lease is part of the sales contracts. .
. .
- Posted by adriel
- On April 6, 2022
0 Comments