The FTT has confirmed in NT Advisors that the transferee under a business transfer that qualified as a transfer of a going concern (TOGC) could reclaim the VAT that it paid as input tax on invoices that it settled after the transfer notwithstanding that the invoices had been addressed to the transferor even when the transferor and transferee had not elected for the transferor's VAT registration to be taken over by the transferee.

As a general matter, a taxpayer is entitled to reclaim VAT costs "on the supply to him" of any services "used or to be used for the purpose of any business carried on or to be carried on by him". Where a business is transferred as a TOGC, the transfer is treated as neither a supply of goods or services and the transferee is treated as having always carried on the business when determining the transferee's registration requirement. It is possible to elect for the transferee to take over the transferor's VAT registration, although this is rarely done in practice.

This case has confirmed that it is not necessary for the transferee to take over the transferor's VAT registration to be able to recover VAT costs that it incurs relating to the business even if the VAT relates to services supplied to the transferor and is paid on invoices addressed to the transferor where the business transfer agreement provides for the transferee to be liable to pay the invoices.