VAT on transfers which are not going concerns

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A recent VAT tribunal case illustrates how important it is to take proper advice on a business sale. The Ryford Arms was sold by Pontardawe Inn Limited.

The purchaser of the premises and goodwill of the Ryford Arms was a company known as Claden Limited; However the fixtures, fittings and equipment were acquired by the shareholders personally. Furthermore, the former employees were not taken on by the new owners. The tribunal held that this was the mere purchase of assets and not an undertaking capable of carrying on independent economic activity, and thus VAT was due.

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