Closing or selling your business and VAT registration

Selling your business

For VAT purposes, HM Revenue & Customs (HMRC) considers that you have transferred your business as a going concern if:

  • you retire and another person takes over the assets of your business
  • you sell your business and its assets to someone else
  • you sell part of your business that is capable of being operated separately to somebody else

When you transfer your business as a going concern, you normally have to cancel your VAT registration.

However in some situations, the new owner of the business can apply to keep your VAT registration number. If you agree and allow the new owner to keep the VAT registration number, then you don't need to cancel your registration. Both you and the new owner of the business should complete form VAT 68. You need to do this within 30 calendar days of selling your business to avoid becoming liable for a financial penalty.

If you decide to allow the transfer of your VAT registration number to the new owner of the business you should cancel any Direct Debit that you have set up to pay your online VAT Returns. The new owner of the business can set up a new Direct Debit through the VAT online service.

Send your completed VAT 68 to:

HM Revenue & Customs
VAT Registration Service
Imperial House
77 Victoria Street
Grimsby
DN31 1DB

Find form VAT 68 to request the transfer of a registration number on the HMRC website

Treatment of the sale for VAT purposes

Normally when you sell something, the sale is treated as a supply for VAT purposes. However when you sell your business, in certain circumstances special rules apply and the sale will not be treated as a supply, for VAT purposes, so no VAT should be charged. In other circumstances, you'll have to charge VAT in the normal way.

These special rules help businesses by improving their cashflow. They also avoid the need to separately value assets that may be liable at different rates or are exempt but have been sold as a whole package.

Taking over a business and VAT registration

Read about the special rules when selling a business in VAT Notice 700/9 on the HMRC website

Read about how land and property are treated in VAT Notice 742 on the HMRC website

Read about opting to tax land and buildings in VAT Notice 742A on the HMRC website

Keeping records

After you sell your business, you must retain your VAT records.

If the buyer keeps your VAT number, you must pass your records to them. Permission can be sought from HMRC for you to keep your records, but you will still have to make the information available to the buyer so that they can comply with their own VAT responsibilities.

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