If only part of a business is transferred as a going concern, that part must be capable of ‘separate operation’ (¶54-160; Value Added Tax (Special Provisions) Order 1995 (SI 1995/1268), art. 5(1)(b)(i)).

This is a question of fact and is often relevant where there is a management buy-out which involves forming a new company to take over part of the business of an existing company.

There is no requirement that the part transferred actually be operated separately after the transfer.

Also, there is no requirement that the assets transferred were operated as a separate business before the transfer.

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