In the context of conveyancing, a going concern refers to an operational business or property and is, at the time of the transfer from one owner to another, generating income.

The following common misconception exists among Sellers and Purchasers: If the Seller and the Purchaser in a property transaction are registered VAT vendors, the transaction qualifies as a going concern. This is not necessarily the case. The purchase and sale of property attract either Transfer Duty or VAT, not both.

Examples include restaurants, hotels, retail stores, guest houses, etc. Holiday homes and rental income from leased residential properties would never qualify as a going concern as these are exempt from VAT. To qualify as a going concern, the Seller must charge VAT on the rent.

Purchasers often prefer buying properties as a going concern because they can take over the operation immediately and benefit from the existing client base and revenue. However, both the Purchaser and the Seller need to conduct thorough due diligence when dealing with property as ‘going concerns’ to assess all the financial implications, assets, liabilities, lease agreements, contracts and any other important aspects relating to that particular property and business.

Two aspects of going concerns that might be applicable, either the selling of the property or the selling of shares



Formal transfer in the deeds office.

No formal transfer in the deeds office; change of ownership is effected at CIPC.

The contract must stipulate if the Purchase price is exclusive or inclusive of VAT.

The contract must stipulate if the Purchase price is exclusive or inclusive of VAT.

The new owner does not inherit any debts, etc., of the previous owner as in the case of “selling of shares” since ownership of the property changes.

Certain requirements and due diligence to be done, for example (and if applicable):

-Liquor licenses


-Mortgage Bond


-Liabilities (e.g. outstanding debts, legal disputes etc.)

-Certificates of Compliance



-Rates & Levies 

Owners of the property change.

Directors of the Company changes.

(Most significant change is that the business has a new owner).

For a property to be sold as a going concern and “zero-rated”, certain requirements need to be met:

  • Seller and Purchaser must be registered VAT vendors;
  • Seller and Purchaser must agree in writing that the property is sold as a going concern;
  • Property must be an income-earning entity on the date of registration of transfer;
  • Seller and the Purchaser must agree in writing that the purchase price is inclusive of VAT at the rate of 0%.


As each transaction is unique, please contact Burden Swart & Botha to discuss any questions relating to your specific matter.