When partners resign or retire from a partnership, the partnership agreement will normally govern their rights and responsibilities following their resignation. However, where the terms of their departure are not agreed, are they entitled to the value of...
It is well known that when a business passes from one VAT-registered trader to another who continues it, the transfer will normally be a 'transfer of a going concern' (TOGC) and no VAT is payable on the sale.
The treatment also applies where the purchaser must become registered for VAT in order to carry on the business, so HM Revenue and Customs have normally accepted as a TOGC the situation in which the buyer has applied to be registered for VAT before completion but a VAT registration number is not allocated until afterwards. Strictly, however, the purchaser should have a VAT number before TOGC treatment is allowable.
However, it has recently been reported that HMRC are increasingly adopting the 'strict' approach and denying TOGC treatment where the purchaser is not formally VAT registered on completion.
This can cause considerable cash flow problems, as the VAT which must then be charged represents a substantial sum and takes time to recover. However, the situation is actually even worse than that, as where VAT is charged on a sale of a property, the Stamp Duty Land Tax (SDLT) will be charged on the 'VAT inclusive' price: SDLT is not recoverable.
