Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

VAT Transfer of a going concern

HM Revenue & Customs
, see all updates

Introduction: EC Law

The UK law is derived from Articles 19 and 29 of the Principal VAT Directive (Directive2006/112/EC) which state:

“Article 19 - Supply of Goods

In the event of a transfer, whether for a consideration or not or as a contribution to a company, of a totality of assets or part thereof, Member States may consider that no supply of goods has taken place and that the person to whom the goods are transferred is to be treated as the successor to the transferor.

Member States may, in cases where the recipient is not wholly liable to tax, take the measures necessary to prevent distortion of competition. They may also adopt ant measures to prevent tax evasion or avoidance through the use of this Article.

Article 29 - Supply of Services

Article 19 shall apply in like manner to the supply of services”.

These articles confer on Member States a fairly wide discretion as to the circumstances in which they may allow the transfer of business assets to be treated as a supply of neither goods nor services and consequently outside the scope of VAT. Because of this, when dealing with TOGC it is the specific terms of the UK legislation which apply.