- Conditions for TOGC Qualification: A transfer of a business as a going concern (TOGC) is VAT exempt if the transferred assets can operate independently as a business, the buyer intends to use them for the same kind of business as the seller, and both parties meet specific VAT registration criteria. It is crucial that there is no significant break in trading, and the buyer must be a taxable person.
- Implications of VAT Treatment: If the TOGC conditions are met, no VAT should be charged on the transfer, which benefits cash flow for the buyer and eliminates the need for complex asset valuations. Conversely, incorrect treatment may lead to penalties and the need for VAT refunds or adjustments by the seller.
- Special Considerations for Property Transfers: When transferring property, additional rules apply concerning the seller’s and buyer’s VAT registration and options to tax. Specific conditions must be met for property transfers to qualify as part of a TOGC, especially if the property would ordinarily be subject to VAT.
Source gov.uk
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