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HMRC internal manual

VAT Assessments and Error Correction

Circumstances that affect assessments: Transfer of a going concern

The procedural guidance in this manual only covers the VAT Mainframe and VISION processes. For guidance on the Making Tax Digital and ETMP processes for fully migrated customers, see VAEC0200 and the Making Tax Digital for VAT compliance toolkit.

Under Regulation 6 of VAT Regulations 1995, the VAT number of the seller or transferor may be reallocated to the purchaser or transferee, subject to certain conditions. This is known as VAT 68 action.

This has the effect of making the purchaser / transferee responsible for the debts and liabilities of the seller / transferor.

This not normally the case when the VAT number has not been reallocated, even in those cases where the seller / transferor and purchaser / transferee are closely associated, e.g. common directors.

See however guidance on transferring and assigning debts and set-off and net-off procedures in the VAT Refunds guidance.

If VAT 68 action has been approved, the new legal entity will not normally be assessed for a penalty in respect of inaccuracies made by the old legal entity.

The setting of the [TOGC] indicator prevents the automatic calculation or testing of some penalties and the recalculation of surcharge for any periods prior to the TOGC date.

The [TOGC] indicator causes the mainframe computer system to produce a print D1972 to assist in the management of processing officers’ assessments.

D1972 Print: Officer’s Assessment affected by TOGC - Procedure

For returns with a due date prior to 1 April 2009 you may wish to check the misdeclaration penalty file (or the VAT 655 for periods before 1 December 1993) to see if misdeclaration penalties (MP) have been imposed for misdeclarations relating to

  • returns rendered prior to the date of TOGC, and / or
  • additional assessments relating to periods prior to the TOGC date.

If MP has not been imposed in respect of such misdeclarations, no further action is required.

If, however, MP has been imposed you should follow the procedures laid out in the VAT Civil Penalties guidance.

For returns with a due date on or after 1 April 2009 you should consult CH80000 or contact Tax Administration, Litigation and Advice (TALA) at Caseworker service for technical queries in cases of doubt or difficulty.