My VAT-registered client (turnover 130,000 - 150,000 pa) is selling his business to a non-VAT registered purchaser.
To be treated as a "Transfer as a Going Concern" (TOGC), and to not charge VAT on the purchase price/sale proceeds (Equipment etc and Goodwill), the purchaser should normally be required to be registered for VAT or intend to register. In this case, the purchaser happens to be an Educational/School Trust, with a turnover of tens of millions of pounds, and whose income is "outside the scope of VAT", and intends to incorporate/integrate my client's business under that same umbrella.
In these particular circumstances, are there grounds for treating the sale as a TOCG - more to the point, for my client not to have to account for VAT on the sale proceeds?
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Does the status of the trust or its activities make income that is VATable for your client not VATable for the trust? I always thought that you looked at the activity as the starting point. The trust's current income may be outside the scope of VAT but does that mean the new activities are?
Your client doesn't have much of a choice. If the transferee insists that they don't need to register, they need to accept that it will be a taxable supply.
"Charging VAT" involves accounting to HMRC for 1/6th of the consideration. It does not necessarily involve adding VAT on top.
If the purchaser does not wish to register for VAT, and will not put up with an increase in price, then your client needs to consider whether 5/6ths of what the vendor is willing to pay is sufficient a price.