What is a transfer of ongoing concern?

A transfer of a business as a going concern (TOGC) however is the sale of a business including assets which must be treated as a matter of law, as ‘neither a supply of goods nor a supply of services’ by virtue of meeting certain conditions. The assets must be sold as part of a ‘business’ as a ‘going concern’*

How do you sell a business as a going concern?

A sale of a business as a going concern involves the seller (the vendor) selling their business to the purchaser together with all of the things that are necessary for the purchaser to continue operating the business. The vendor must also keep running the business up until the day of sale (the settlement date).

Is a Togc exempt from VAT?

In certain circumstances special TOGC rules apply and the sale will not be treated as a supply for VAT purposes, so no VAT should be charged. To qualify as a TOGC , the assets sold must be both of the following: used by the purchaser to carry on the same kind of business as that operated by the seller.

What is Togc VAT?

A Transfer of a Going Concern (TOGC) is an area of VAT which produces a lot of issues and is a subject which is returned to on a regular basis in the courts. The General Distribution Storage Ltd (GDSL) First Tier Tribunal (FTT) TC 07352 [2019] case provides a warning that getting it wrong can be costly.

What is a going concern property?

Property that’s part of a sale of a going concern can include any of the following: the business property, when sold together with the assets and operating structure of the business. a fully tenanted building, where the property and all leases, agreements and covenants are included in the sale.

What is meant by going concern?

Going concern is an accounting term for a company that has the resources needed to continue operating indefinitely until it provides evidence to the contrary. If a business is not a going concern, it means it’s gone bankrupt and its assets were liquidated.

What is a supply of a going concern?

The ATO says a supply of a going concern occurs when: “a business is sold, and that sale includes all of the things that are necessary for the business to continue operating”, and. the business is carried on, “up until the day of sale”.

Is a leaseback a going concern?

The sale and leaseback of a commercial building is not a going concern, Mr Wolfers said. This type of transaction has been increasingly popular in recent years as companies offload their property assets but offer them for sale with a leaseback to themselves so they can remain as a tenant in the building.

Do you pay VAT on a going concern?

In certain circumstances, it is possible to structure a commercial property sale so that it qualifies as a transfer of a going concern (TOGC). Where the TOGC rules apply, the sale of the property falls outside the scope of VAT; this means that no VAT is chargeable.

Do you have to pay VAT on the sale of a business?

Sale of trade and assets Under normal circumstances, the sale of business assets would be subject to standard rated VAT. If TOGC status applies, no VAT is charged on the transfer of the assets. The conditions for a TOGC to apply for VAT purposes are: the entire business is transferred as a going concern; or.

Is sale of goodwill subject to VAT?

A sale of goodwill by itself is not likely to be a transfer of a going concern (TOGC), and so VAT should be added to the sale price. But if the goodwill by itself would allow the buyer to run a similar business to yours then it can be a TOGC and you must not charge VAT.

Can residential property be sold as a going concern?

The Seller must be charging VAT on the rental for it to qualify as a going concern. Residential property (other than a Guest House), is exempt from VAT . Even if both parties are VAT vendors, it could never qualify as a going concern.

How is a transfer of a business treated as a going concern?

This notice explains whether the transfer of a business should be treated as a ‘transfer of a business as a going concern’ ( TOGC) for VAT purposes. It also explains the VAT treatment in each circumstance. It will help you ensure that the correct amount of VAT, when chargeable, is properly accounted for and paid.

What does VAT transfer of a going concern mean?

used by the purchaser to carry on the same kind of business as that operated by the seller You can find further information about the application of the TOGC rules in VAT Transfer of a going concern. In this notice, the word ‘business’ means any continuing activity which is mainly concerned with making supplies to other persons for a consideration.

What does it mean to transfer property as a going concern?

This means that the sales take their normal VAT liability (taxable or exempt). Such immediate transfers often occur in property transactions where A contracts to sell property to B, and B ‘sub-sells’ the property to C with both contracts being completed by a single transfer from A to C.

Can a transfer of a business be treated as a togc?

This notice explains whether the transfer of a business should be treated as a ‘transfer of a business as a going concern’ (TOGC) for VAT purposes. It also explains the VAT treatment in each circumstance. It will help you ensure that the correct amount of VAT, when chargeable, is properly accounted for and paid. Want to read more?

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