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HMRC internal manual

VAT Transfer of a going concern

Common areas of difficulty: transfer of assets over time

Usually the transfer of all of the assets will take place at the same time. On occasions however, you may find that the assets have been supplied over a period of time. There is no requirement for the transfer of all of the assets to take place at once for Article 5 of the VAT (Special Provisions) Order 1995 to apply, provided that the effect of the transfers is to put the purchaser in possession of a business. Generally, the closer together that the transfers take place the more likely it is that they are in essence part of the same transaction, but this is not conclusive in itself.

Even where it has been agreed that there has been a TOGC of the main business assets, you may find cases where other assets are acquired shortly before, or shortly after, the main transaction. In such circumstances you will need to determine if they are legitimately part of the first transaction -i.e. is there a business or will the assets be liquidated.

During April and May 1995 Fairmatch Ltd (LON/95/317AA) bought three orders of stock and two quantities of materials from another company. In late May 1995 Fairmatch bought this other company as a going concern. Fairmatch tried to reclaim input tax on the five earlier invoices for stock and materials. The tribunal disallowed these claims, stating that the transactions were “consistent with a series of transactions comprising the transfer of a business” and that the assets were intended “to be used in carrying on the same kind of business”.