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HMRC internal manual

VAT Transfer of a going concern

What is the transfer of a business as a going concern?: The approach to making your decision

To be neither a supply of goods nor a supply of services, a transaction must not only be the transfer of a going concern but also meet certain conditions. If you believe that the VAT treatment of a transaction by a business does not reflect the reality of what has occurred, then when deciding whether or not there is a TOGC for VAT purposes, you can approach your decision from either of two directions.

a.       Establish whether the business has been transferred as a going concern before going on to the various requirements under the sub-paragraphs of Article 5 of the VAT (Special Provisions) Order 1995. [VTOGC3550]

This approach was used in the Padglade (MAN/93/210) tribunal when the chairman said: “The article does not say that a going concern is defined by the three qualifications, the qualifications follow when the prime question has been answered.”

If the answer to the question “has there been the transfer of a going concern?” is NO, then there has been no TOGC for VAT purposes. There may then be no need to decide whether the sub-paragraphs have been complied with.

b.       Alternatively. it may be easier to approach the problem by checking if the conditions in the sub-paragraphs have been fulfilled. If they are not, then the asset transfer will be outside the “de-supply” effect of the TOGC provisions, even if all the other factors indicate that a TOGC has occurred.


Which approach you take will generally be determined by the individual facts of each case and neither is right or wrong. It is important to weigh up all the factors involved in the transaction and obtain all relevant information and documents before coming to your decision.