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HMRC internal manual

VAT Registration

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HM Revenue & Customs
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Transfers of going concerns (TOGC): VAT registration: taxable supplies

VAT Act 1994, Schedule 1, paragraph 1(2)

This provides that, where there is a TOGC, the transferee is liable to register for VAT if his taxable supplies in the past year have exceeded the registration threshold. ‘His taxable supplies’ will be determined by Section 49(1)(a) of the VAT Act (see VATREG29250).

Therefore, if the transferor’s relevant turnover in the year to the date of transfer had exceeded the registration threshold, the transferee would have a liability to register on the day of the TOGC. Relevant turnover in this context is the turnover of the business, or part business, being transferred.

Where the transferee had been making taxable supplies of his own prior to the TOGC, he must add the value of those to the supplies made by the transferred business.

If the transferee is not liable to register on the date of the TOGC, he may become liable to register at a later date.

VAT Act 1994, Schedule 1, paragraph 1(1)

Where the transferee of a TOGC is not liable to register on the date of transfer, he must continue to include the relevant past turnover of the business prior to the TOGC on a monthly rolling basis with his own turnover to determine whether he becomes liable to register at some point after the TOGC. In this case, the normal VAT registration rules will apply. This principle was confirmed in the Tribunal case Melvin Nathaniel Fox t/a The Cavendish Hotel MAN/02/0664 (VTD 18441).

Where he had been making taxable supplies of his own prior to the TOGC, he must add the value of those to the supplies made by the transferred business.

Forward look

VAT Act 1994, Schedule 1, paragraphs 1(1) and 1(2) both provide for a ‘forward look’ liability to register.

The ‘forward look’ provides that if, in the next 30 days, there is an expectation that the turnover in those 30 days alone will exceed the registration threshold, there is a liability to register.