VAT—what is a transfer of a business as a going concern?
Published by a LexisNexis Tax expert
Practice notesVAT—what is a transfer of a business as a going concern?
Published by a LexisNexis Tax expert
Practice notes
The sale of a 'business' is really a sale of assets bundled together. In principle, 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 applying 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 is 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
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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Asset definition
What does Asset mean?
(1) Any item of value; (2) The holdings of a fund, which may include stocks, shares, fixed-interest securities or cash; (3) The main types of investment available: bonds, equities, real estate, commodities etc.
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