Category: VAT

A Transfer of Going Concern, or TOGC, is an important VAT concept when a business changes hands. Where the conditions are met, the sale of a business can be treated as outside the scope of VAT, so no VAT is charged on the transfer.

What Is a TOGC?

A Transfer of Going Concern applies when a business, or a distinct part of it, is sold as a going concern and continues to trade under the new owner. Meeting the conditions means the transaction is not treated as a supply for VAT, avoiding an unnecessary VAT charge.

The Key Conditions

For TOGC treatment, the assets must be used by the buyer to carry on the same kind of business, there must be no break in trading, and the buyer must usually be VAT-registered. Special rules apply where property is involved, including the option to tax.

Why It Matters

Getting TOGC treatment wrong can lead to unexpected VAT, cash-flow strain or disputes between buyer and seller, so the conditions should be checked carefully before completion.

How TaxDigit Can Help

Our Guildford-based team helps buyers and sellers confirm whether a Transfer of Going Concern applies. Contact us before your transaction completes.

Transfer of Going Concern: UK-Wide VAT Support

A Transfer of Going Concern is a key VAT issue whenever a business changes hands, and it arises right across the United Kingdom, not just near our Guildford head office. TaxDigit helps buyers and sellers UK-wide confirm whether a sale qualifies as a Transfer of Going Concern so VAT is handled correctly.

Our chartered certified accountants check each TOGC condition, advise on property and option-to-tax points, and make sure the treatment is agreed before completion. We support clients UK-wide, both remotely and from our Guildford office.

Getting a Transfer of Going Concern wrong can be expensive for both sides. If VAT should have been charged but was not, the seller can face an assessment; if it was charged unnecessarily, the buyer may struggle to recover it and could overpay Stamp Duty Land Tax on a property. We pin down the treatment early and document the conditions so the deal completes cleanly.

How we help with a Transfer of Going Concern

• Reviewing whether the sale meets all the TOGC conditions
• Advising on property TOGCs and the option to tax
• Confirming VAT registration requirements for the buyer
• Documenting the treatment in the sale agreement
• Coordinating with solicitors so VAT and SDLT align

HMRC explains the rules here: HMRC guidance on transferring a business as a going concern (VAT Notice 700/9).

Frequently Asked Questions

What is a Transfer of Going Concern?
It is the sale of a business as a going concern that, where the conditions are met, is treated as outside the scope of VAT, so no VAT is charged on the transfer.

Does a property sale qualify as a TOGC?
It can, but there are extra conditions around the option to tax and the buyer’s VAT position, so property TOGCs need careful checking.

Can TaxDigit help if I am not based in Guildford?
Yes. We advise on Transfers of Going Concern for clients UK-wide, remotely and from our Guildford office.

The option to tax is a key decision for anyone dealing with commercial property and VAT. Normally, the sale or letting of commercial property is exempt from VAT, but the option to tax allows an owner to charge VAT and recover related input tax.

What Is the Option to Tax?

By making an option to tax, a property owner chooses to apply VAT to supplies of a property that would otherwise be exempt. This makes the income standard-rated, but in return it allows recovery of VAT on costs such as construction, refurbishment and running expenses.

Why Owners Opt to Tax

The main reason to make an option to tax is to recover input VAT that would otherwise be lost. For landlords with significant costs, this can be very beneficial, though it means tenants who cannot recover VAT face an extra cost.

Points to Consider

An option to tax generally lasts twenty years and must be notified to HMRC. It can also affect whether a later sale qualifies as a Transfer of Going Concern, so the decision needs care.

How TaxDigit Can Help

Our Guildford-based team helps property owners decide whether to make an option to tax. Get in touch before committing to a property VAT position.

Option to Tax: UK-Wide VAT Support

The option to tax is a major decision for commercial property owners right across the United Kingdom, not just near our Guildford head office. TaxDigit helps property owners and investors UK-wide decide whether to opt to tax and handle the process correctly with HMRC.

Our chartered certified accountants weigh up VAT recovery against the impact on tenants and buyers, then manage the notification and any later revocation. We support clients UK-wide, both remotely and from our Guildford office.

Opting to tax is a long-term commitment that normally lasts twenty years, so it should never be a snap decision. It can unlock input VAT recovery on a purchase or refurbishment, but it can also make a property less attractive to VAT-exempt tenants such as charities or financial businesses. We model the cash flow and the wider deal before you commit, and we keep the paperwork in order for any future Transfer of Going Concern.

How we help with the option to tax

• Assessing whether opting to tax improves your overall VAT position
• Notifying HMRC of an option to tax correctly and on time
• Advising on the impact for exempt tenants and future buyers
• Coordinating the option to tax with TOGC treatment on a sale
• Advising on revoking an option to tax where appropriate

HMRC explains the rules here: HMRC guidance on opting to tax land and buildings (VAT Notice 742A).

Frequently Asked Questions

What is the option to tax?
It is an election that lets an owner charge VAT on the sale or letting of commercial property that would otherwise be exempt, which in turn allows related input VAT to be recovered.

Can an option to tax be reversed?
There are limited windows to revoke an option to tax, including a cooling-off period and after twenty years, each with specific conditions.

Can TaxDigit help if I am not based in Guildford?
Yes. We advise on the option to tax for clients UK-wide, remotely and from our Guildford office.