Q. I own a number of restaurants, all selling English-style food. I plan to sell two of these to separate buyers. The first of these intends to operate an Asian fusion restaurant, and the second (smaller) premises is going to be turned into a micropub. Both buyers insist that the sales will meet the conditions for a transfer of a going concern (TOGC) so I should not add VAT to the purchase costs. However, I'm worried that this isn’t correct; in the first case the type of food served will be different, and in the second, the new establishment will not be a restaurant, although I am told the owner will serve bar snacks. What is the correct position?
A: The that the fact that the first buyer will be serving a completely different type of food is irrelevant, it is the point that they intend to operate as a restaurant, i.e. the same type of business, that is key. Subject to all the conditions being met, this should not be a problem and you should not need to charge VAT. However, as the second buyer is intending to trade as a completely different type of business this cannot come within the TOGC provisions. You will need to add VAT to the price charged accordingly.