VAT—what is a transfer of a business as a going concern?
Produced in partnership with Cathya Djanogly

The following Tax practice note produced in partnership with Cathya Djanogly provides comprehensive and up to date legal information covering:

  • VAT—what is a transfer of a business as a going concern?
  • What are the conditions for a sale of business to be treated as a TOGC?
  • When are assets of a business transferred as a going concern?
  • When does the buyer use the assets in the same kind of business?
  • Who has to be a taxable person and when?
  • The seller is not registered for VAT
  • The seller is registered for VAT
  • Impact of novation
  • What is capable of separate operation?
  • Impact on asset sales

VAT—what is a transfer of a business as a going concern?

The sale of a 'business' is really a sale of assets bundled together. VAT would therefore be charged on the transfer of each asset in accordance with the normal rules, ie standard rate, reduced rate, zero rate and exemptions applied according to each type of asset, unless the sale of the business is treated as a transfer of a business as a going concern (a TOGC).

If the sale of a business is treated as a TOGC it is treated as neither a supply of goods nor a supply of services and therefore outside the scope of VAT. No VAT is then chargeable on the sale.

In order to be treated as a TOGC, the transfer must meet certain conditions that are explained in this Practice Note.

If the conditions are met, there are consequences for the buyer and seller that are explained in Practice Note: Consequences of a transfer of a going concern.

This Practice Note includes references to EU directives and case law. The UK ceased to be an EU Member State on 31 January 2020. On this date, the UK entered an implementation period (IP), during which it continued to be treated as a Member State for many purposes, and remained bound by EU law. The IP ended at 11 pm on 31 December

Popular documents