Business Brief 11/2016 sets out HMRC’s updated guidance on how business transfers should be treated for VAT. The first policy change reflects the taxpayer’s success in the Intelligent Managed Services case. Following that decision, HMRC now accepts that the sale of the business can be non-VATable, even though that business only services members of its own VAT group after the sale. HMRC has also clarified its interpretation of how the VAT registration test for business transfers applies when the purchaser is not established in the UK. Although the scenarios presented in the brief are relatively niche, they underline the practical difficulties businesses face interpreting the VAT tests in this area.
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