RCB/11/16 VAT and the transfer of a going concern
Revenue & Customs Brief, Issue 11. 24 June 2016
Purpose of this brief
(a) This brief sets out the HM Revenue and Customs (HMRC) position following the judgment of the Upper Tribunal in the case of Intelligent Managed Services Limited (IMSL). The case concerned the transfer of a business into a VAT group.
(b) The brief also clarifies the situation where a business is transferred to a person without an establishment in the UK.
• taxable persons transferring all or part of their business into a VAT group
• members of VAT groups acquiring or disposing of businesses
• those involved in the transfer of a business to a person not established in the UK
1 VAT and the transfer of a going concern: VAT Groups and the Intelligent Managed Services Limited judgment
Generally the supply of the assets of a business is taxable at the standard rate of VAT. However, subject to certain conditions, the supply of the assets of a business is treated as neither a supply of goods nor a supply of services when these are transferred together with all, or part, of that business as a going concern (article 5, VAT (Special Provisions) Order 1995). At the time of the transfer the transferee must intend to use the assets as a continuation of the business activity of the transferor.
Corporate bodies which share a common control may choose to register as a VAT group. The supply of goods or services between members of