VAT and Property Option to Tax: what’s happening?

Written by Chris Barlow

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Latest | Tax

January 11, 2023

From the 1st of February 2023, HMRC will stop sending receipt letters for VAT option to tax (OTT) notifications. They will, however, still send an automated email reply to OTT notifications sent via email. 

We recommend that you bear this in mind, and use email when notifying HMRC of an option to tax, instead of their online form service. You will then receive an automated email reply that can be stored with your VAT records as evidence of notification. Going forward, if you notify HMRC in any other way, you will no longer receive any acknowledgement, unless HMRC needs any further information about the OTT.

Not only this, but if you request confirmation of the existence of an OTT, the request will not be processed, unless certain circumstances apply. HMRC has outlined that they will process the request under the following circumstances:

  • It is likely that the OTT effective date is over 6 years ago, or…
  • The individual requesting confirmation has been appointed Land and Property Act Receiver or Insolvency Practitioner to administer the property.

If these conditions are met, then the request should be accompanied by a letter or deed of appointment of your role. The following details should also be provided:

  • The name of the business/person who had opted to tax the property
  • A VAT Registration Number (if applicable)
  • The full address of the property or land in question, including the postcode
  • The effective date of the OTT if you know it
  • The date you first charged VAT on the opted land or property
  • The date the property was acquired/a loan was taken out by the person who opted to tax. 

Businesses are required to keep their VAT records for six years. We’d suggest keeping your OTTs longer than this for an easier process if the property is sold or leased. 

We also highly recommend that you speak to us before making any decisions about opting to tax your land or property, so that you can understand the full financial implications.

For more advice, speak to Chris Barlow:

[email protected]

+44 (0) 1 942 816 512

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