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HMRC internal manual

VAT Groups

From
HM Revenue & Customs
Updated
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VAT avoidance - groups of companies statement of practice on the new Schedule 9A VATA 1994: example of prevailing commercial reason

The following illustrates the type of case where, should a tax advantage arise from the stated transactions alone, we would accept a genuine commercial reason as prevailing.

There is a movement of a company or a business to a group registration directly following the purchase of the entire issued share capital of a company or the assets of a business as a going concern where:

  • the sale is for full consideration
  • the buyer has no interest in the business of the seller and the seller has no interest in the business of the buyer, either before or after the transaction apart from the sale, and
  • the sale is not associated with any other operation, transaction or arrangement whereby the business (or the part of the business) of the company or any part of the issued share capital of the capital which is sold, or any interest in that business or company, may revert to the seller or to any person who has an interest in the business of the seller.