European courts have been arguing exactly what constitutes TOGC
and what does not; our VAT expert delves into the detail.
In the world of VAT, transactions are divided into two main
groups: supply of goods, or supply of services. Thanks to this
distinction VAT is the most common tax and everyone in modern world
has or will have to deal with
VAT (or sales tax) either as formal taxpayer or as factual
taxpayer (when paying for goods or services where VAT was added to
final price).
However there are certain types of goods, services or
transactions that are exempted or excluded from VAT, including the
transfer of a going concern (TOGC).
TOGC, according to EU Directive and the Value Added Tax (Special
Provisions) Order 1995 (SPO), is neither a supply of goods nor a
supply of services. Consequently TOGC is not subject to VAT and the
transfer of a business can be done without adding any VAT to the
final price.
