Transfer of a Going Concern

VAT on Sales invoices following TOGC of business

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I am currently advising a client who is transferring their whole business to another body. Both parties are currently VAT registered. The transfer will be a TOGC so there will be no VAT costs related to the transfer of business, and I understand how my client can recover any input tax incurred through the final VAT return and VAT427.

However, what happens if my client has still to issue VAT sales invoices to customers after the date of transfer? As the business has ceased, the VAT registration number won't be valid, so are invoices sent without VAT, or does the right to the income transfer with the business, so the new owner will raise the sales invoice with VAT under their VAT registrtation number?

HMRC guidance has lots on input tax, but I'm struggling to find info on output tax following a TOGC.

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By johngroganjga
20th Sep 2016 10:44

Your client can't issue sales invoices after the sale - only the new owner can.

If there are uninvoiced sales at the completion date, presumably your client is receiving the agreed value of them in the sale consideration.

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By Democratus
20th Sep 2016 12:23

Quite right John - the WIP must have been, or should have been recognised when valuing the disposal. If the WIP was not part of the disposal and the right to bill remains with your client then, if he/she isn't VAT registered then no VAT should be charged, ceteris paribus.

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