VAT transfers of a going concern

The sale of a business is really the sale of a number of assets bundled together. Under basic principles, VAT would be charged on the transfer of each asset according to the rules applicable to that asset, ie standard rate, reduced rate, zero rate or exempt. However, additional rules override the basic principles where a business is transferred as a going concern (a TOGC).

If the sale of a business is treated as a TOGC it is treated as neither a supply of goods nor a supply of services and therefore outside the scope of VAT. No VAT is then chargeable on the sale.

Conditions for the sale of a business to be treated as a TOGC

Where the business being transferred does not contain any land and buildings (for which further conditions may apply as set out below), it must meet the following conditions in order to be treated as a TOGC:

•
the supply must be a supply of the assets of the seller's business (or part of it) as a going concern
•
the buyer must use the assets transferred in carrying on the

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