The following Tax guidance note Produced in partnership with Cathya Djanogly provides comprehensive and up to date legal information covering:
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.
The conditions for a transfer to qualify as a TOGC are:
the supply must be a supply of the assets of the seller's business (or part of it) as a going concern
the buyer is to use the assets transferred in carrying on the same kind of business as that carried on
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