Finance Act 1998

21 Deemed supplies

(1) Paragraph 5 of Schedule 4 to the [1994 c. 23.] Value Added Tax Act 1994 (disposal of business assets) shall be amended as follows.

(2) In sub-paragraph (2)(a) (exception for gifts of small value), for “is” there shall be substituted “of acquiring or, as the case may be, producing the goods was”.

(3) After sub-paragraph (2) there shall be inserted the following sub-paragraph—

“(2A) For the purposes of determining the cost to the donor of acquiring or producing goods of which he has made a gift, where—

(a) the acquisition by the donor of the goods, or anything comprised in the goods, was by means of a transfer of a business, or a part of a business, as a going concern,

(b) the assets transferred by that transfer included those goods or that thing, and

(c) the transfer of those assets is one falling by virtue of an order under section 5(3) (or under an enactment re-enacted in section 5(3)) to be treated as neither a supply of goods nor a supply of services,

the donor and his predecessor or, as the case may be, all of his predecessors shall be treated as if they were the same person.”

(4) In sub-paragraph (5) (transactions without consideration to be treated as supplies under paragraph 5 only where the supplier is a person entitled to credit for input tax), for “is” there shall be substituted “or any of his predecessors is a person who (disregarding this paragraph) has or will become”.

(5) After that sub-paragraph there shall be inserted the following sub-paragraph—

“(5A) In relation to any goods or anything comprised in any goods, a person is the predecessor of another for the purposes of this paragraph if—

(a) that other person is a person to whom he has transferred assets of his business by a transfer of that business, or a part of it, as a going concern;

(b) those assets consisted of or included those goods or that thing; and

(c) the transfer of the assets is one falling by virtue of an order under section 5(3) (or under an enactment re-enacted in section 5(3)) to be treated as neither a supply of goods nor a supply of services;

and references in this paragraph to a person’s predecessors include references to the predecessors of his predecessors through any number of transfers.”

(6) The preceding provisions of this section apply to any case where the time when the goods are transferred or disposed of or, as the case may be, put to use, used or made available for use is on or after 17th March 1998.