Difficulties can arise when applying the rules for transfers of going concerns (TOGCs) because the treatment depends on:

(1)questions of fact, which can be difficult to determine;

(2)the circumstances when HMRC check the application of the law; and

(3)special conditions that try to stop VAT avoidance, but which can trap the unwary.

No VAT due on TOGC

Subject to conditions, a transfer of a business (or of part of a business) as a ‘going concern’ is not a supply for VAT purposes, so no VAT is due. A ‘transfer’ includes a sale at full value, a sale at an under value, an exchange and a gift. So, a transferor may be a seller or donor. A transferee may be a purchaser or donee.

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