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bigduckontax, Accountant
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Two ltd companies - both trade as convenience stores - same

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Two ltd companies - both trade as convenience stores - same director in both plus one other director in second ltd company. Second ltd company ceased to trade due to financial difficulties. In process of de - registering for vat purposes. Business could not be sold to outside source. Therefore stock and assets being transferred to first ltd company to be used in that company. Is this covered under TOGC for vat purposes Or are we looking at vat paid back to HMRC under stock & assets worth more than £6000.?
Also first ltd company are taking on one employee from closing company.
Please clarify situation.
Thank you
J Bunker
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. The following advice is available at HMRC information sheet VTOGC2050: 'Where the sale meets the conditions the supply is outside the scope of VAT and therefore VAT is not chargeable.HMRC see the conditions as being:The assets must be sold as part of a ‘business’ as a ‘going concern’*1The assets are to be used by the purchaser with the intention of carrying on the same kind of business as the sellerWhere the seller is a taxable person, the purchaser must be a taxable person already or become one as the result of the transferWhere only part of a business is sold it must be capable of separate operationThere must not be a series of immediately consecutive transfersIn respect of land which would otherwise be standard rated if it were supplied, the purchaser must notify HMRC of an option to tax the land by the relevant date. See public notice 742A.You should note that there are circumstances when the seller’s option to tax would be disapplied. See public notice 742A.' From this Notice it would appear that the transfer of stock can be undertaken outside the scope of VAT. A comment on the relelvant invoice would suffice. The transfer of staff is irrelevant to the VAT position. I do hope that my reply has been of assistance.
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