How to Transfer a Business as a Going Concern: Your VAT Notice 700/9 Action Plan

Did you know that a business sale can often avoid VAT entirely if you follow the right process? On the flip side, a small mistake during the transfer can saddle you with a surprising tax bill that you probably didn’t see coming. If you’re looking at selling or buying a business, getting your head around VAT Notice 700 is more than just a box tick. It plays a key role in whether your deal goes smoothly or hits expensive delays. The rules around transferring a business as a going concern confuse many people, and confusion leads to costly errors and HMRC headaches. Whether you’re stepping into new ownership or handing the reins to someone else, a clear path can calm a stressful process.

In this guide, you’ll learn how to follow VAT Notice 700 step by step, find out exactly what counts as a proper business transfer, and see which documents keep HMRC happy. You’ll also get practical tips to protect yourself from unnecessary VAT – both now and after the deal closes. After reading, you’ll understand:

• The essential requirements and legal markers for a valid business transfer under UK VAT rules.

• How to tick every box on the official paperwork for both buyer and seller.

• What counts as a going concern (and what doesn’t) according to VAT Notice 700/9 (See HMRC Guide).

• How to avoid common VAT traps and make sure your transfer is truly VAT-exempt.

• Best practices you can use to keep the process stress-free and audit-proof.

Ready to get started? Let’s make VAT one less thing to worry about on transfer day.

Main Steps to Transfer a Business as a Going Concern (VAT Notice 700 Guide)

Step 1: Confirm If Your Sale Is Truly a TOGC

First things first: ensure your business transfer qualifies as a Transfer of a Going Concern (TOGC) according to VAT Notice 700/9. This means the business must be running and operational, not just a collection of assets changing hands. Both the seller and buyer need to have a genuine intention to keep the business active, carrying out the same activities after the transfer.

To hit the HMRC requirements, check off these criteria:

• Is the business currently trading and not just selling off unused supplies?

• Does the transfer include crucial elements like equipment, inventory, goodwill, contracts, and access to premises?

• Will the buyer continue running the same type of business?

Missing even one key element can mean standard VAT applies, costing you thousands. For more details, you can always refer back to the official guidance on the UK government’s site Transfer a Business as a Going Concern (TOGC) - VAT Notice 700/9.

Step 2: Pull Together All the Necessary Paperwork

Now, gather every document that backs up your business transfer story. Having strong documentation is your best defense if HMRC ever asks questions. This means:

• Formal contracts showing the transfer of ownership or responsibility

• Lists of assets, equipment, or inventory being transferred

• Details of any staff who are moving to the new owner

• Lease agreements or property options if any physical location is included

If property is involved, review whether an “option to tax” applies, since this affects the VAT position. Both parties should agree, in writing, that the deal is a TOGC and not just a simple asset sale.

Here’s a quick-reference table of key documents to review:

Step 3: Tackle the VAT Accounting and Registration Head-On

This step is a big relief: if your transfer meets TOGC rules, no VAT is charged on the sale itself. However, both sides have key VAT jobs to do. The buyer must figure out if, after the purchase, their total taxable sales will either cross or are already over the VAT threshold (currently £90,000). If so, they must register for VAT within 30 days.

• Sellers: Make sure all VAT records, returns, and payments are shipshape and up to date.

• Buyers: Decide if you’ll keep the seller’s VAT number. If yes, fill out Form VAT68 to arrange the transfer.

• Both: Be precise with all VAT notices to avoid surprises down the road.

One HMRC stat:

“If the buyer is already VAT-registered or must register after the transfer, they are liable for VAT accounting from day one.”

VAT1 Notes: VAT Registration Advice from HMRC.

Step 4: Notify HMRC and Complete the Handover Properly

Once all the contracts are signed, it’s time to loop in HMRC. Letting HMRC know about changes in VAT registration, or agreeing to transfer a VAT number, should be done promptly to keep everything legal and simple. For deals involving land or buildings, double-check the buyer has opted to tax when necessary and sends the right notice to HMRC and the seller before the deal closes.

A few reminders for this stage:

• Update all accounting and VAT records to show the new owner and date of handover.

• Clarify who handles the last VAT return (usually the seller, but confirm it)

• Keep copies of every notification or important email with HMRC

Pro Tip:

Communication is everything. “A delay in notifying HMRC about transfer details can result in unwanted penalties and confusion for both parties," warns the official VAT guidance.

See more about post-transfer steps in the official HMRC manual here.

Step 5: Double-Check and Keep Records for Future Peace of Mind

Finally, go over every detail. Holding on to your TOGC documentation and updated VAT returns is your safety net if HMRC ever calls. Make sure everything matches up — from asset lists to VAT correspondence. Keep copies for at least six years.

Key actions in this step:

• Archive your agreement, notifications, and key VAT records in a secure place

• Store documents so both seller and buyer can easily access if needed

• Note down important contacts (HMRC helplines, accountant) in case a question pops up in the future

Staying organized doesn’t just save you from tax headaches, it also proves your professionalism to any future buyers, partners, or auditors.

Following these five steps ensures you’re fully in line with VAT Notice 700, your paperwork stands up to inspection, and your business transfer is as stress-free as possible. For more insights or up-to-date support, check the latest official government guidance online. If you want to know more about keeping up with other essential VAT compliance obligations and potential risks in the UK, see our article on vatabout.com.

Best Practices for Handling VAT Notice 700 When Transferring a Business

A smooth business transfer that counts as a Transfer of a Going Concern (TOGC) can be a real win, dodging big VAT costs and keeping both sides out of HMRC’s crosshairs. But the rules are detailed, and a missed step can cause unwanted bills or even unravel your deal. The following best practices will help you nail every step of the transfer, meet the official requirements of VAT Notice 700, and keep everyone protected - long after contracts are signed.

1. Document Every Step of the TOGC Transfer Thoroughly

Good records are your best ally. Keep a clear audit trail by saving copies of every key document tied to the VAT Notice 700 transfer:

• Legal contracts showing what’s being sold and the agreed transfer date

• Full lists of all assets, inventory, and any staff involved

• Lease agreements, property documentation, and "option to tax" forms

• Any HMRC letters or notices

A tidy, organized set of files is crucial if HMRC ever asks for proof or if you face an unexpected audit.

2. Always Check TOGC Eligibility With a VAT Specialist

Before going too far, consult a VAT advisor familiar with VAT Notice 700 and TOGC rules. The requirements are strict, and making a wrong call can lead to VAT being applied, killing your cash flow. An expert can:

• Confirm your deal ticks all the HMRC boxes

• Spot any issues with business continuity, assets, or contracts

• Flag if you’re missing documents or need extra steps, especially with property or leases

A fresh set of trained eyes can save both buyer and seller from surprise tax headaches down the road. You can review the full official checklist on the government's TOGC page here.

3. Flag Land and Building Deals for Option to Tax – Fast

If your business transfer includes land, commercial property, or buildings, timing is everything. Submit any “option to tax” notifications to HMRC quickly, and confirm the buyer has also opted for tax when needed. Missing this step can disqualify the transfer from TOGC treatment, leading to a large and avoidable VAT bill. Put this front and center in your checklist whenever property is involved.

4. Spell Out Who Covers Existing VAT Liabilities

Don't leave past VAT liabilities up for debate. Use the sale agreement to state who is responsible for any old tax debts, errors in past VAT returns, or unpaid bills. Make it crystal clear who pays what, and cover all open periods before the handover date. This move removes confusion and helps keep business relationships solid - especially if issues pop up down the road.

5. Arrange Immediate VAT Registration for the Buyer

If the buyer’s turnover will hit the VAT threshold after the transfer, they must register for VAT within 30 days of crossing that line. If the new owner needs to keep trading right after the deal - no exceptions here - fill out the VAT68 form to transfer the old VAT number, or apply for a new one. Trading unregistered can trigger fines and backdated tax bills, so sort this before you sign.

6. Keep Everyone in the Loop With Smart Stakeholder Communication

Smooth transfers rely on clear conversations. Tell all important contacts - accountants, solicitors, employees, and HMRC - exactly what’s happening and when. Good communication kills off nasty surprises and keeps your transfer process on track. When possible, confirm things in writing so there’s no confusion later.

7. Make the Latest HMRC VAT Guidance Regular Reading

Don’t assume that rules from last year still apply. Laws and policies around VAT Notice 700 change, sometimes without much warning. Schedule a quick review of HMRC’s official guidance before, during, and after your deal to catch any updates or clarifications. The UK government’s VAT guide is always up to date—bookmark it for future deals here’s the latest official VAT Notice 700/9 guidance.

8. Store All Transfer and VAT Documents Securely, Long-Term

After the deal closes, keep every important transfer and VAT document safe for at least six years. Use cloud backups or fireproof archives for digital and paper copies. Organized records aren’t just for audits - they make it easier if you need to reference details for future business moves or queries with HMRC.

When you follow these steps, you put yourself in the best position for a seamless, VAT - compliant transfer - keeping your deal, and your peace of mind, intact. For expert support at any stage, the 1stopVAT team has your back.

Final thoughts

Transferring a business as a going concern following VAT Notice 700 saves you money and keeps you safe from VAT problems. The steps are clear: confirm TOGC status, keep all paperwork, sort VAT details fast, and get expert advice when needed.

Get these basics right and your business handover will move smoothly, letting you focus on what matters instead of tax troubles.