Transferring VAT number cover letter

If you acquire the trade and assets of a business as a transfer of a going concern (TOGC), you can apply to keep a pre-existing VAT registration number.

TOGC

When you buy a business as a TOGC you have the option of taking over the existing VAT number as well. You do this by completing a Form VAT68 and submitting it to HMRC, along with the VAT1 application for VAT registration. The previous owner must not submit a VAT7 application for deregistration. Once the transfer of the registration has been allowed by HMRC it cannot be revoked.

There are a number of advantages and disadvantages of retention.

Advantages

Advantages include:

• retaining existing invoices and stationery
• administration during the changeover period is simplified
• VAT return periods remain unaltered
• no disruption for supplies and customers checking the validity of a new VAT number, particularly when dealing with EC supplies.

Disadvantages

Keeping the seller’s VAT number can create a potential problem because a business takes on all the VAT liabilities of the existing registration and could be caught out by an assessment for mistakes made by the seller. Therefore, the procedure is only suitable when the two parties are closely connected or when you are just changing the entity of the business.

A right to reclaim overpaid VAT only belongs to the person who overpaid it. The tribunals have held this to be so even if the VAT number had been transferred; the TOGC provisions only transfer the right to repayment of input tax.

Procedure

You will need to complete a Form VAT68 (to apply for the transfer) and a VAT1 to register your business. Use our Transferring VAT Number Cover Letter to accompany these forms.You must do this within 21 days following the transfer.