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Our client company is not yet trading but is in the process of acquiring a business. Employees will be transferred under the Transfer of Undertakings (Protection of Employment) Regulations.
The business in question makes VAT-exempt supplies of insurance some of which are supplied in accordance with SI 1993/3121 art 3 such that input VAT recovery is possible in relation to such supplies under VATA 1994 s 26(2) (c). This means that the existing business owner is voluntarily VAT registered under VATA 1994 Sch 1 para 10.
Ideally the transfer (of in essence goodwill) will fall within SI 1995/1268 art 5 (supply of assets outside the scope of VAT when transferred with a business as a going concern) such that VAT will not fall as a cost to either party. However one ...
