When selling business and you have stock does the new buyer pay VAT?

Question

Say I have stock at cost worth £10,000.00, some of the stock could be older than three months so I would have claimed VAT back on these items. I then sell my business does the new buyer pay VAT on top of the £10,000.00????

Answer 1

This depends on exactly what you are selling. Does your business have other assets besides the stock? Is the purchaser buying stock or a full business?

If you are selling substantially all the business then this is classed as a Transfer Of Going Concern (TOGC) and the deal will be outside the scope of VAT. So no VAT would be charged on the sale and none reclaimed by the purchaser.

If it is really just the bulk sale of stock then VAT would have to be charged. Once the purchaser is registered he will be able to reclaim this, though, so it is really just a cash flow problem.