Commentary

V2.137 Liability to AVT registration when business transferred as a going concern

Part V2 Registration – deregistration

V2.137 Liability to AVT registration when business transferred as a going concern

V2.137 Liability to AVT registration when business transferred as a going concern

Liability to register for VAT when a business is transferred as TOGC due to historical turnover

Transferees who are not registered becomes liable to registration when a business (or part of a business) is transferred to them as a TOGC if both of the following apply1:

  1.  

    •     the person who carried on the business before to the transfer ('the transferor') is a taxable person, and

  2.  

    •     the value of the transferee's taxable supplies in the period of one year ending at the time of transfer has exceeded the prescribed registration limit (currently £85,0002, see V2.134 for future changes and see 'UK taxable supplies—deregistration' in Tax tables and checklists for past prescribed limits).

The transferee is treated as having carried on the business before as well as after the transfer for this purpose and supplies by the transferor are treated accordingly3. Therefore, the transferees are liable to registration by reference to the aggregate of the value of taxable supplies:

  1.  

    •     from their existing business (if any), and

  2.  

    •     made by the transferor in carrying on the business which is transferred to the transferee

In this context, it was held in Mustaque Ahmed4 that the value of taxable

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