The transfer of a business as a going concern (TOGC) rules concern the VAT liability on the sale of a business. Normally the sale of the assets of a VAT registered or VAT registerable business will be subject to VAT at the appropriate rate.

Where the sale of a business includes assets and meets certain conditions the sale will be categorised as a TOGC. A TOGC is defined as 'neither a supply of goods nor a supply of services' and is therefore outside the scope of VAT. Under the TOGC rules no VAT would be chargeable on a qualifying sale.

All the following conditions are necessary for the TOGC rules to apply:

• The assets must be sold as part of a 'business' as a 'going concern'. In essence, the business must be operating as such and not just an 'inert aggregation of assets'.
• The purchaser intends to use the assets to continue the same kind of business as the seller.
• Where the seller is a taxable person, the purchaser must be a taxable person already or become one as the result of the transfer.
• Where only part of a business is sold it must be capable of separate operation.
• There must not be a series of immediately consecutive transfers.
• There are further conditions in relation to transactions involving land.

The TOGC rules can be complex, and both the vendor and purchaser of a business must ensure that the rules are properly followed. The TOGC rules are also mandatory which means that it is imperative to establish from the outset whether a sale is or is not a TOGC. For example, if VAT is charged in error, the buyer has no legal right to recover it from HMRC and would have to seek to recover this 'VAT' from the seller.

CIGMA Accounting

CIGMA Accounting Ltd is a forward-thinking accounting and tax firm based in London, dedicated to delivering high-quality compliance, tax planning, and business advisory services to entrepreneurs, landlords, and growing SMEs. With offices in Wimbledon and Farringdon, we combine local expertise with a tech-driven approach to simplify accounting. Our services include corporation tax filing, VAT compliance, HMRC investigation support, R&D tax credit claims, capital allowances optimisation, and bookkeeping automation. What sets CIGMA apart is our ability to blend traditional accounting rigour with AI-powered systems that reduce errors, save time, and provide real-time financial insights. Our team ensures that every client - from startups to high-net-worth individuals - receives a bespoke solution aligned with their growth goals. Whether you need strategic tax planning, help with HMRC disclosures, or a full outsourced finance function, CIGMA Accounting delivers clarity, compliance, and confidence.

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The transfer of a business as a going concern (TOGC) rules concern the VAT liability on the sale of a business. Normally the sale of the assets of a VAT registered or VAT registerable business will be subject to VAT at the appropriate rate.

Where the sale of a business includes assets and meets certain conditions the sale will be categorised as a TOGC. A TOGC is defined as 'neither a supply of goods nor a supply of services' and is therefore outside the scope of VAT. Under the TOGC rules no VAT would be chargeable on a qualifying sale.

All the following conditions are necessary for the TOGC rules to apply:

• The assets must be sold as part of a 'business' as a 'going concern'. In essence, the business must be operating as such and not just an 'inert aggregation of assets'.
• The purchaser intends to use the assets to carry on the same kind of business as the seller.
• Where the seller is a taxable person, the purchaser must be a taxable person already or become one as the result of the transfer.
• Where only part of a business is sold it must be capable of separate operation.
• There must not be a series of immediately consecutive transfers.
• There are further conditions in relation to transactions involving land.

The TOGC rules can be complex, and both the vendor and purchaser of a business must ensure that the rules are properly followed. The TOGC rules are also mandatory which means that it is imperative to establish from the outset whether a sale is or is not a TOGC. For example, if VAT is charged in error, the buyer has no legal right to recover it from HMRC and would have to seek to recover this 'VAT' from the seller.

CIGMA Accounting

CIGMA Accounting Ltd is a forward-thinking accounting and tax firm based in London, dedicated to delivering high-quality compliance, tax planning, and business advisory services to entrepreneurs, landlords, and growing SMEs. With offices in Wimbledon and Farringdon, we combine local expertise with a tech-driven approach to simplify accounting. Our services include corporation tax filing, VAT compliance, HMRC investigation support, R&D tax credit claims, capital allowances optimisation, and bookkeeping automation. What sets CIGMA apart is our ability to blend traditional accounting rigour with AI-powered systems that reduce errors, save time, and provide real-time financial insights. Our team ensures that every client - from startups to high-net-worth individuals - receives a bespoke solution aligned with their growth goals. Whether you need strategic tax planning, help with HMRC disclosures, or a full outsourced finance function, CIGMA Accounting delivers clarity, compliance, and confidence.

See Full Bio