ACCA ATX ^UK Syllabus A6. Value Added Tax - Transfer of a going concern - Notes ^{4 / 4}

No VAT is charged where

1. A business is transferred /sold as a going concern

2. Provided the transferee business is already VAT‐registered or will become registered immediately after the transfer and so they will be held responsible to charge output VAT on the subsequent sale of goods

3. There should be no significant gap in the start of other business

4. Nature of the trade would not change

Illustration

Martin is registered for VAT but intends to cease trading on 31 March 2025.

On the cessation of trading Martin can sell his entire business as a going concern to a single purchaser.

Will output VAT be charged on the sale?

Solution

This is a sale of business as a going concern, therefore output VAT will not be charged if the following conditions are met:

1. A business is transferred /sold as a going concern

2. Provided the transferee business is already VAT‐registered or will become registered immediately after the transfer and so they will be held responsible to charge output VAT on the subsequent sale of goods

3. There should be no significant gap in the start of other business

4. Nature of the trade would not change