Last updated: 16 October 2026
The question
We are a partnership with turnover above the VAT threshold. We plan to incorporate and run the business through a limited company. Does the company need to register for VAT, and do we charge VAT on the assets we transfer to it?
What is a TOGC?
A transfer of a going concern (TOGC) is the sale or transfer of a business, or part of a business, as a going concern. If the conditions are met, the transfer is outside the scope of VAT. No VAT is charged on the assets, which saves cash flow and avoids the buyer needing to reclaim VAT.
TOGC conditions
- The assets are transferred as part of a business that is a going concern
- The buyer intends to use the assets to carry on the same kind of business
- There is no significant break in trading
- If the seller is VAT registered, the buyer is already registered or becomes liable to register
- For part of a business, that part can operate separately
Incorporating a partnership
On incorporation, the partnership business transfers to the new company. The company takes over the turnover history, so if the partnership’s taxable turnover exceeded the £90,000 threshold, the company must register for VAT from the date of transfer. The partnership must deregister.
| Option | What happens |
| Keep the VAT number | Apply on form VAT68 to transfer the registration to the company. The company takes on the partnership’s VAT liabilities. |
| New VAT number | The company registers separately and the partnership deregisters. The company does not inherit past liabilities. |
Property and the option to tax
If the business owns a commercial property that has been opted to tax, the buyer must also opt to tax and notify HMRC before the transfer date, and confirm the option will not be disapplied. If not, VAT must be charged on the property.
Worked example
Lee and Mo run a café as a partnership with turnover of £180,000. They transfer the business, including equipment worth £20,000, to Lee & Mo Ltd on 1 May 2026. The company registers for VAT from that date. Because it is a TOGC, no VAT is charged on the equipment. They choose to transfer the VAT number to keep things simple for customers and suppliers.
Other taxes on incorporation
- Capital gains: incorporation relief may defer gains on goodwill if the whole business is transferred for shares.
- Capital allowances: an election can transfer assets at tax written-down value.
- Stamp duty land tax: may apply to property transfers.
- Employees: TUPE rules apply and payroll moves to the company.
Frequently asked questions
Should we charge VAT if we are unsure?
If it is a TOGC, VAT charged in error is not reclaimable by the buyer. Take advice.
Is a TOGC possible if the buyer isn’t VAT registered?
Only if the seller isn’t registered either, or the buyer becomes liable to register.
What if the business stops trading first?
It may not be a going concern, so VAT could be due on the assets.
Do we need HMRC’s permission?
No, but you must meet the conditions and keep evidence.
Related: whether to incorporate your business, capital allowances after incorporating a partnership and incorporation relief for CGT.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with incorporation and VAT. See our VAT accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
