Reallocation of VAT registration number (VAT 68 action) conditions of reallocation

When a business is transferred as a going concern it is possible for the transferee to take the VAT registration number of the transferor. We do no generally advise such an action as the transferee inherits any VAT “issues” of the transferor, but there may be occasions where it is desirable.

Details of TOGCs including the conditions here.

The additional new condition for the reallocation of the VAT number in a TOGC is that the transferor may not have a VAT debt.

Details of VAT 68

• the transferee must complete the form if it wants to keep the registration number of the previous owner. The transferee must also complete a form VAT 1. The previous owner must not complete a form VAT 7 to deregister
• once the transfer of the registration number has been allowed, it cannot be revoked
• the conditions that the new and previous owners must agree to are set out on the application form and are legally binding. This means that the transferee will be liable for any outstanding VAT from the previous owner’s registration. The transferor will no longer be entitled to any repayments of VAT or unclaimed input tax, even if these amounts refer to periods before or after the transfer
• the previous owner must cancel any Direct Debit that they have set up to pay their VAT

Full conditions

The following conditions should be met as both a matter of law before reallocation can be allowed.

• a TOGC must have taken place
• a VAT 68 must have been completed correctly by all parties
• the transferor must not have already deregistered
• the transferee must not already be registered
• where the transferor is a corporate body, it must not have been dissolved before the VAT 68 was signed
• a group registration must not be involved
• the transferor must be neither liable nor eligible to remain VAT-registered following the transfer
• the transferor must not be the subject of a Notice of Direction in respect of disaggregation.
• the transferor must have no VAT debt. This includes amounts declared (both due or not yet due), penalties and other applied charges – the new condition
• any assessment notified to the transferor covering periods before the date of transfer must be paid
• any assessment raised, or due to be assessed, against the transferor, or any voluntary disclosure made by the transferor, must be paid with no indication of an appeal
• any penalty incurred by the transferor for periods prior to the date of transfer must have been paid, with no indication of an appeal
• any interest incurred by the transferor for periods prior to the date of transfer must have been paid with no indication of an appeal
• no civil penalty has been or is intended to be imposed on the transferor

HMRC internal guidance on this matter VATREG30100 here