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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: VAT: liability for payment: transfer of a going concern

Regulation 6 (3)(a) of the VAT Regulations 1995 provides:

“Where the transferee of a business has under paragraph (1) above been registered under Schedule (1) to the Act in substitution for the transferor of that business, and with the transferor’s registration number -

(a) Any liability of the transferor existing at the date of the transfer to make a return or account for or pay VAT under regulation 25 or 41 shall become the liability of the transferee.” 

The references to paragraph (1) are to the requirements for transfer of a going concern, which are:

  • the existing business must deregister following the transfer (this takes place when the VAT68 is completed);
  • the new owner must carry on the business under the old owner’s VAT registration number; and,
  • both the former owner and the new owner must agree to transfer of liability.

Regulation 6(2) of the VAT Regulations 1995 provides that the receipt of VAT 68 is satisfactory notification of deregistration of the transferor. If the requirements for TOGC are not met there is no transfer of liability, and the former owner remains liable for the debts he incurred.

See V1-10 Transfer of a going concern.