Overview of a transfer of a business as a going concern

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Overview of a transfer of a business as a going concern
  • Conditions
  • Non-established persons
  • Transactions that will not be treated as a TOGC
  • Assets
  • Recovering VAT on costs
  • VAT issues after a TOGC
  • Accounting matters
  • VAT groups
  • Conclusion

This document discusses these in detail, together with the acquisitions by non-established persons; transactions that are not a TOGC; business assets; recovering VAT on costs incurred; VAT issues after a TOGC; and accounting matters.

This guidance note provides an overview of the main VAT treatment regarding the transfer of business assets as a going concern. This note should be read by a business or its adviser if they are involved in the disposal of business assets.

Please see the Transferring land and property as part of a TOGC guidance note if the transfer involves land and property.

If the transfer of a business as a going concern (TOGC) provisions are satisfied, the transfer of all or part of the business assets will be disregarded for VAT purposes and no VAT can be charged on the value of the assets transferred. Businesses are required to treat the transfer as a TOGC if they meet the conditions outlined below.

This note could be used in conjunction with Flowchart – must the transfer be treated as a TOGC? and TOGC – transaction checklist.


Businesses need to be aware that they are legally required to use the TOGC provisions if they meet the conditions outlined below. Therefore, it is essential that the business or its advisers ascertain as soon as possible whether the transfer of the trade and assets should be treated as a TOGC in order to ensure that the correct VAT treatment is applied to the transaction. This point was confirmed by the tribunal in Advanced Business Technology (LON/83/195) (subscription sensitive). In this case the purchaser paid VAT to the seller on the purchase price but the output tax had not been declared by the seller. Both parties agreed that a TOGC had taken place but the seller did not repay the VAT charged and the purchaser used the VAT tribunal to force him to do so. The tribunal confirmed that once a TOGC had been agreed and the conditions in the law met, both parties were bound by it and could not opt

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