Accounting for VAT when you transfer a business as a going concern

Accounting for VAT when you transfer a business as a going concern

Accounting for VAT when you transfer a business as a going concern (TOGC)

At the end of last year, the European Court of Justice gave its judgment on a case concerning the question of the lease of a restaurant and whether it could qualify as the transfer of a business.

The phrase ‘transfer of a going concern’ or ’TOGC’ is widely used in VAT terms but often misused and misunderstood.

You should contact Haslers if you are thinking of selling or otherwise transferring a business, or part of a business. We can also offer advice on this, if you’re acquiring a business. In certain circumstances special TOGC rules apply and the sale will not be treated as a supply for VAT purposes, so no VAT should be charged. To qualify as a TOGC, the assets sold must be both of the following:
•capable of forming a separate business in their own right
•used by the purchaser to carry on the same kind of business as that operated by the seller

If you are thinking about a transaction being treated as a TOGC, our team have extensive experience in this area and regularly work with lawyers in business transactions to protect theirs and their clients’ interests. Please contact us to see how we can help you and your business.