Andrew Needham highlights a potential VAT trap following a previous transfer of a going concern.
When you buy a business or part of a business as a transfer of a going concern (TOGC), the vendor does not charge VAT, as it is not treated as a supply of either goods or services for VAT purposes. This means that you can acquire a business without the cashflow disadvantage of having to pay out the VAT and then waiting up to four months to receive the VAT refund.
De-registering for VAT
When a business de-registers for VAT, it has to account for VAT (known as a ‘deemed supply’) on the value of stock and assets on hand at the time of de-registering where the total VAT on the current market value of the goods is over £1,000 and VAT has been recovered on their purchase.
This
