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HMRC internal manual

VAT Traders’ Records Manual

Preserving records: Transfer of a Going Concern and Record Keeping

Prior to 1 September 2007, the business records of a business transferred as a going concern (TOGC) had to be transferred to the buyer of the business, although the seller was able to apply to HMRC for permission to keep the records.

From 1 September 2007, the seller of a business transferred as a going concern normally retains the records. However:

  • the seller must provide the buyer with information from the records necessary for the buyer to comply with his duties under the VAT Act;
  • the seller must make the information available to the buyer within a timeframe and in a form that the buyer reasonably requests. To fulfil this obligation it is acceptable for the seller to provide copies of the requested records, or to allow the buyer suitable access to the relevant records to make their own copies, or extract details of the relevant data from the records;
  • where the buyer applies to HMRC for permission to take on the seller’s VAT number, the seller is still required to transfer the records to the buyer, unless the seller needs to retain the records, in which case he may apply to HMRC for permission to do so. In such a case the seller must make available to the buyer the information he needs to comply with his duties under the VAT Act.

HMRC may disclose to the buyer information it holds on the transferred business that is needed by the buyer to comply with its duties under the VAT Act.

Changes were made to the Value Added Tax Act 1994, section 49 and the VAT regulations 1995, regulation 6 (by virtue of SI 2085/2007)

The change was introduced as a simplification measure in response to comments from business and representative bodies following a review of the VAT rules for TOGCs. The change in record keeping requirements brings the VAT rules into line with other regulatory regimes.

Also, changes have been made to the law to confirm that the transfer of a going concern includes the transfer of part of a business which is capable of separate operation.