Selling your company: can you avoid VAT, and recover it on the deal fees?

First, the good news: you can usually avoid VAT on the sale itself

Start with the reassuring part. There are two common ways to sell a company, and both usually keep VAT off the sale itself. A share sale, where the buyer acquires the shares in your company, is an exempt supply under Group 5 of Schedule 9 to the VAT Act 1994, the finance exemption that covers dealings in shares and securities. No VAT is charged on the shares.

An asset sale, where the buyer takes the trade and assets rather than the company, is the other route. Selling assets is normally taxable, and that includes goodwill, but if the sale qualifies as a transfer of a going concern it is treated as neither a supply of goods nor of services, and falls outside VAT entirely. So on the sale itself, both routes typically avoid a VAT charge. The difference shows up somewhere less obvious.

Share sale or asset sale: the choice that decides your VAT

The structure of the deal is usually driven by tax and risk, not VAT. Sellers often prefer a share sale, because the gain can qualify for capital gains treatment and reliefs, and the company leaves with its history attached. Buyers often prefer an asset sale, because they can pick the assets they want and leave old liabilities behind. That negotiation sets the structure before VAT gets a look in.

But the structure you land on quietly decides the VAT outcome too. A share sale is exempt. An asset sale is either taxable or, more usually, a transfer of a going concern that is outside VAT. On the sale itself the practical result looks similar, no VAT changes hands. The place it stops looking similar is your own costs.

The expensive part: the VAT on your deal fees

Selling a company is not cheap to do. Corporate finance advisers, solicitors and accountants all charge fees, and on a substantial deal those fees carry a substantial amount of VAT. Whether you can recover that VAT is not a footnote: it can be one of the largest single VAT questions in the whole transaction.

Recovery follows the supply your costs are linked to. If the fees are the costs of making a taxable supply, or a general overhead of a taxable business, the VAT comes back. If they are the costs of making an exempt supply, the VAT is blocked and becomes a real cost. That single principle is what makes the choice between a share sale and an asset sale matter so much.

Why a share sale can block your fee recovery

Here is the sting in a share sale. Because the sale of shares is exempt, the professional fees you run up to make that sale, the corporate finance work, the legal advice, the due diligence, are the costs of an exempt supply. The VAT on them is, as a rule, not recoverable.

Sellers often assume that because the money raised is going back into a VAT-registered trading business, the VAT on the sale costs must be recoverable as a business overhead. In 2025 the Supreme Court closed that argument down in Hotel La Tour [2025] UKSC 46. It held that where the professional costs are directly and immediately linked to the exempt share sale, the VAT is not deductible, even though the proceeds were used for a taxable purpose. The link to the exempt sale comes first, and it breaks the recovery.

The exception that flips it: a buyer outside the UK

There is one important exception to the share-sale block, and on cross-border deals it is worth real money. The rule that denies recovery applies to an exempt supply made in the UK. But where the buyer of the shares belongs outside the UK, the sale becomes what the rules call a specified supply, under the VAT (Input Tax) (Specified Supplies) Order 1999, and a specified supply carries a right to recover the related input tax.

In plain terms: a share sale to a UK buyer usually blocks the VAT on your deal fees, but the same sale to a buyer based outside the UK can let you recover it. On a large disposal to an overseas acquirer, that single fact can change the after-tax economics of the deal, and it is exactly the kind of point that is easy to miss when everyone is focused on the headline price.

Why an asset sale as a going concern usually protects it

An asset sale sold as a going concern works differently, and better, for your costs. Because a going concern is not itself a supply, the cost of selling cannot be attributed to it. HMRC's Notice 700/9 treats those selling costs instead as a general overhead of the business being transferred, recoverable according to whether that business made taxable or exempt supplies.

For an ordinary trading company that makes taxable supplies, that usually means the VAT on the sale costs is recoverable. So two deals that both avoid VAT on the sale itself can end up in opposite places on the fees: the share sale blocking recovery, the going-concern asset sale preserving it. On a large transaction that difference is worth real money, and it is decided by a structure most people choose for reasons that have nothing to do with VAT.

Who is actually selling: the company, or you?

One structural detail decides recovery more often than people expect: who actually incurs the professional fees. On a share sale, the sellers are usually the shareholders, not the company. If the advisers are engaged by, and invoice, the shareholders personally, the advice is supplied to them as individuals, and there is no VAT-registered business to recover it, so the VAT is lost whatever the wider structure.

Where the company itself engages the advisers, and can show the costs relate to its own taxable business, the position is better, though the exempt-share-sale link can still bite. The practical point is that the engagement letters, and who signs them, need thought at the start of the deal, not after the invoices arrive. It is one of the cheapest things to get right and one of the most expensive to get wrong.

Goodwill and the property inside the deal

Two assets inside the deal carry their own VAT questions. The first is goodwill: on an asset sale that is not a going concern, goodwill is a taxable supply of services, so VAT is due on it, and it is often the largest single figure in the price. Only the going-concern treatment takes it outside VAT, which is one more reason the going-concern conditions are worth meeting rather than assuming.

The second is property. If the business owns premises on which an option to tax is in place, a going-concern sale only holds if the buyer also opts to tax and notifies HMRC by the relevant date. Miss that and the property part of the deal is standard-rated, with VAT due that the price never accounted for. On any deal with real estate in it, the property VAT position has to be checked alongside the rest, not bolted on at the end.

When you might need expert VAT advisory

On a company sale, the VAT rarely decides the deal, but it can decide how much of your advisory bill you carry yourself, and that is a larger number than most sellers expect. In practice, the situations below are where a senior specialist's read meaningfully improves the outcome:

• You are choosing between a share sale and an asset sale and want the VAT consequences weighed alongside the tax, before the structure is fixed
• You are selling the trade and assets and need the transfer-of-a-going-concern conditions met, so no VAT is charged
• You want the VAT on your deal fees recovered where it can be, and the engagement letters set up so it is not lost
• Your buyer is based outside the UK and you want the recovery that an overseas sale can unlock to be claimed correctly
• The business owns opted-to-tax property and you need the going-concern treatment to hold across it
• Goodwill is a large part of the price and you need its VAT treatment confirmed
• You are an adviser on a transaction and want the VAT recovery position sense-checked before completion

Whether you're a founder selling your company or an adviser structuring the deal, we focus on the VAT questions where extra expertise pays off, and we work in plain English.