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An incorrect VAT charge on the sale of a business can cause big problems for the buyer.
KEY POINTS
- Conditions for the sale of a business to be deemed a transfer of a going concern.
- HMRC does not give written rulings to confirm the transfer-of-a-going-concern rules apply.
- The buyer claimed input tax but the seller did not declare output tax.
- What constitutes a break in trade for transfer-of-a-going-concern purposes?
I should have delayed writing this article until the Taxation edition that is published in Halloween week. Yes you’ve guessed it I am going to tell you a VAT horror story one that will send a tingle of fear through many spines.
It is about a taxpayer who incorrectly charged VAT on the transfer of his business as a going concern (TOGC) but did not account for output tax on his final VAT return before he deregistered. The buyer claimed input...
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