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HMRC internal manual

VAT Transfer of a going concern

Common areas of difficulty: Transfer of a wholly exempt business

A VAT registered business carrying on both exempt and taxable businesses, may transfer the wholly exempt part of his business as a going concern. If the purchaser does not carry on some other, taxable, business, he will not normally be a taxable person. Accordingly, the taxable person conditions for the TOGC provisions to apply are not met and, therefore, the sale of the assets will be a supply. Where the assets are goods on which no input tax was deductible (because they were directly attributed to a wholly exempt activity) their supply is exempt.

However, this does not apply to services. Therefore any charge for goodwill etc. means there will be a standard rated supply by the seller.