What is a TOGC for VAT purposes?
Answered 17 March 2026
I have sufficient sources to answer this question comprehensively. Let me provide a clear explanation of what a TOGC is for VAT purposes.
Transfer of a Going Concern (TOGC) for VAT Purposes
What the law says
The TOGC rules are grounded in the VAT (Special Provisions) Order 1995, Article 5, which provides the legal basis for treating certain business transfers as outside the scope of VAT.
HMRC guidance / practice
Definition and effect
A TOGC is the transfer of a business (or part of a business) as a going concern. Where the TOGC rules apply, the sale is not treated as a supply for VAT purposes, meaning no VAT is chargeable — even if the assets would otherwise be standard-rated, exempt, or zero-rated.
Normally, the sale of assets of a VAT-registered business would be subject to VAT at the appropriate rate. The TOGC rules create an exception to this.
The rules are mandatory, not optional. It is therefore essential to establish from the outset whether a transaction is or is not a TOGC.
Conditions that must all be met
For a transaction to qualify as a TOGC, all of the following conditions must be satisfied:
| Condition | Detail |
|---|---|
| Assets sold as part of the TOGC | Must include assets such as stock-in-trade, machinery, goodwill, premises, and fixtures and fittings |
| Same kind of business | The buyer must intend to use the assets to carry on the same kind of business as the seller — it need not be identical, but the buyer must acquire a business, not merely a set of assets |
| Buyer is a taxable person | Where the seller is a taxable person, the buyer must already be, or become, a taxable person as a result of the transfer |
| Land/buildings (standard-rated) | The buyer must notify HMRC of an option to tax and notify the seller that the option has not been disapplied, by the relevant date |
| Separate operation | Where only part of a business is sold, it must be capable of operating separately |
| No consecutive transfers | There must not be a series of immediately consecutive transfers of the business |
The two-stage test
HMRC guidance confirms there are two valid approaches to determining whether a TOGC exists:
- First ask whether a business has been transferred as a going concern — if the answer is no, there is no TOGC and there may be no need to consider the sub-conditions further; or
- Check whether the specific conditions in the sub-paragraphs are fulfilled — if they are not, the transfer falls outside the TOGC provisions even if other factors suggest a TOGC has occurred.
Practical note: The TOGC treatment can produce significant financial benefits. For example, in one case it was noted that structuring a sale as a TOGC avoided the need to finance £17m of VAT and also reduced the SDLT liability (since VAT is included in the chargeable consideration for SDLT purposes).
Citation sources
This notice explains whether the transfer of a business should be treated as a ‘transfer of a business as a going concern’ (TOGC) for VAT purposes. It also explains the VAT treatment in each circumstance. It will help you ensure that the correct amount of VAT, when chargeable, is properly accounted for and paid. You should read this notice if you are selling or otherwise transferring a business, or part of a business. It will also be useful if you’re acquiring a business. In certain circumstance
Transfer a business as a going concern (VAT Notice 700/9) explains the VAT position if you’re selling or transferring your business and its assets, or part of it. In certain circumstances, special transfer of a going concern (TOGC) rules apply, and the sale will not be treated as a supply for VAT purposes, so no VAT should be charged. The transfer of a businesses or part of a business is treated as a VAT-free TOGC where all of the following conditions are met: it’s capable of separate operation
at 1:58pm: ‘We need to give a letter of comfort on VAT should HMRC not accept the TOGC structure. I will get [Field Fisher] to draft the letter as it should touch upon our confidence of our planning and what if scenario and you can then add how CDL will support Pinenorth and you can then send to Jeremy.’ 38. By the afternoon of 17 December 2014 (15:39 hours) Wedlake Bell were able to forward their amendments to the draft contract to Dechert to reflect what the parties had agreed in order to move
To be neither a supply of goods nor a supply of services, a transaction must not only be the transfer of a going concern but also meet certain conditions. If you believe that the VAT treatment of a transaction by a business does not reflect the reality of what has occurred, then when deciding whether or not there is a TOGC for VAT purposes, you can approach your decision from either of two directions. a) Establish whether the business has been transferred as a going concern before going on to th
Normally the sale of the assets of a VAT-registered business, or a business required to be VAT registered, will be subject to VAT at the appropriate rate. But if you sell assets as part of a business which is a going concern then, subject to certain conditions, no supply takes place for VAT purposes and no VAT is chargeable. It’s important to be aware that the TOGC rules are mandatory and you should establish from the outset whether the sale is a TOGC. It does not matter if your sale of assets w