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HMRC internal manual

VAT Transfer of a going concern

HM Revenue & Customs
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Common areas of difficulty: transfer of a wholly exempt business

A VAT registered business carrying on both exempt and taxable businesses, may transfer thewholly exempt part of his business as a going concern. If the purchaser does not carry onsome other, taxable, business, he will not be a taxable person. Accordingly, the taxableperson conditions for the TOGC provisions to apply are not met and, therefore, the sale ofthe assets will be a supply. Where the assets are goods on which no input tax wasdeductible (because they were directly attributed to a wholly exempt activity) theirsupply is exempt. However, this does not apply to services. Therefore any charge forgoodwill means there will be a standard rated supply by the seller.