Schriever: the grant of a lease and TOGCs

The judgment of the European Court in Finanzamt Ludenscheid v Christel Schriever (Case C-444/10) has been awaited with some interest since the questions referred to the Court raise some interesting issues about how thegrant of a lease fits into the transfer of going concern (TOGC) provisions for VAT purposes.

Commentators have often railed against the inequity that in HMRC’s eyes the sale of a freehold or assignment of a lease subject to tenancy can be a TOGC whereas the grant of an overriding lease subject to an underlying tenancy can never be a TOGC (the latter result arising because HMRC does not consider that the grant of an interest constitutes the transfer of an interest; rather it is the creation of a new interest). This seems an unsatisfactory result and would certainly appear to breach the European Court’s favoured principle of ‘fiscal...