TOGC ― conditions

Produced by Tolley

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

  • TOGC ― conditions
  • What are the TOGC conditions?
  • Is the new owner put in possession of a business?
  • Going concern
  • Assets acquired over time
  • Is the business the same kind of business?
  • Continuing business activity
  • Similar businesses
  • Breaks in trading
  • Franchises
  • More...

TOGC ― conditions

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.

This guidance note looks at the conditions which need to be met for a transfer to be treated as the transfer of a business as a going concern (TOGC) and hence outside the scope of VAT.

For an overview of TOGCs more broadly (including the rationale behind these provisions), see the TOGC ― overview guidance note.

In-depth commentary on the legislation and case law can be found in De Voil Indirect Tax Service V2.226.

Please see also the following workflow aids:

  1. interactive flowchart ― must the transfer be treated as a TOGC? (for a static pdf version, see the Flowchart ― must the transfer be treated as a TOGC?)

  2. TOGC ― transaction checklist

For some practical examples, see Example 1 and Example 2.

What are the TOGC conditions?

HMRC suggests that if all of the following apply, a TOGC will be seen as taking place:

  1. the assets, such as stock-in-trade, machinery, goodwill, premises, and fixtures and fittings must be sold as part of the TOGC (ie the new owner must be put in possession of a business that can be operated as such)

  2. the buyer must intend to use the assets in carrying on the same kind of business as the seller (and there must be no significant break in trading)

  3. where the seller is a taxable person, the buyer must be a taxable person already or become one as the result of the transfer

  4. in respect of land or buildings which would be standard-rated if it were supplied, the buyer must notify

Popular documents