In many cases the first evidence that we will see of assets being transferred is an invoice issued to the purchaser by the seller showing VAT. This output tax may or may not have been declared and paid by the seller. Where you are satisfied that the transaction in question is covered by Article 5 of the VAT (Special Provisions) Order and the supply is not a supply for VAT purposes, no tax is chargeable. Any amount said to be “VAT” is not VAT.
Similarly, the purchaser has no right to deduct the “VAT” as input tax even if he paid the sum to the seller in good faith. In both Shire Equip Ltd (MAN/83/52) and Jaymix (LON/83/265) it was held that the fact that an invoice with VAT shown was issued was irrelevant and the invoices could be ignored when the actual effect of the transfer was of a business as a going concern.
Officers should use their discretion to decide whether an assessment is appropriate. They should consider the circumstances of each individual case.
Source gov.uk
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