Test your understanding: answers
(1). Statement A is false.
On a transfer of a going concern it is still necessary to charge VAT on a new building (ie one that is less than three years old) and on any building where an option to tax has been made. VAT need not be charged in these circumstances if the purchaser opts to tax the building.
Statement B is false.
Where a business is sold to a connected person there will still be capital allowances balancing adjustments unless the vendor and the purchaser make a succession election.
(2). Baxter’s base cost in the shares acquired