Grants of leases and TOGCs

Some readers (my mother at least) may remember that I penned an opinion piece in these pages in December last year after the CJEU decision in Schriever (Case C-444/10). This case had been viewed in some quarters as authority that HMRC's established practice that the grant of a lease can never be a TOGC was a breach of EC law. However the case revolved around the sale of a sports shop and was always likely to be limited by these facts. It was certainly a bit of a stretch to argue that it provided a conclusive answer to the question of whether the grant of an overriding lease (with the benefit of a subtenancy) could be a TOGC.

HMRC's published stance is quite clear. Notice 700/9 provides that if you ‘…own a headlease and grant a sub-lease you are not transferring your business as a going...