The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
This guidance notice should be read by a business that is involved with either buying or selling business assets. This note does not outline the VAT rules relating to the sale of a business via a share disposal. For more information on this topic, please read the VAT treatment of the issue of shares in a business and VAT treatment of share disposals and acquisition guidance notes.
Normally the sale or transfer of business assets are liable to VAT as the sale of goods and /or services. However, under the transfer of a business as a going concern (TOGC) rules, no VAT can be charged on the transfer of business assets where the relevant conditions have been satisfied.
The TOGC rules were introduced to simplify the VAT accounting rules when a business is sold, as there is no requirement for a business fund the VAT due on the assets transferred. The TOGC provisions also assist HMRC with protecting revenue, as the seller may charge VAT on the transfer of the business and disappear with the VAT rather than remit it to HMRC.
In order for the sale to qualify as a TOGC it is necessary for relevant business assets to be transferred to the purchaser (transferee) and the transferee must be able to use the assets to operate a business from the date the assets were transferred. Business assets generally include the following:
The types of assets that need to be transferred, in order for the transferee to operate a business, will depend
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