Further changes to VAT option to tax notification process

Supplies of land and buildings are normally exempt from VAT. This means that no VAT is chargeable, but the person making the supply cannot normally recover any of the VAT incurred on their own expenses. However, it is possible to opt to charge VAT on land by making an option to tax (OTT).

Notification

HMRC has announced that from 1 February 2023, the only receipt provided by HMRC for an OTT notification will be the automated email response provided when an OTT notification is emailed to optiontotaxnationalunit@hmrc.gov.uk.

The automated response should be kept in the taxpayer’s VAT records. The date on the response confirms the date that HMRC has been notified.

HMRC will not provide a receipt or acknowledgement for an OTT notification submitted by any other means. HMRC will respond if further information is required. The responsibility for ensuring the OTT notification is correct and valid remains with the opter.

Confirming existing OTT notifications

HMRC has also announced that it will no longer process requests confirming the existence of an OTT, apart from in the following circumstances:

• the effective opted date is likely to be over six years ago; or
• the request is made by a Land and Property Act receiver or an insolvency practitioner, to administer the property in question.

If these conditions are met, the following details must be provided to HMRC with the request:

• name of the business/person who had opted to tax the property;
• a VAT registration number (if applicable); 
• the full address of the land/property in question, including postcode; the effective date of the option to tax if known;
• the date you first charged VAT on the opted land/property;
• the date the property was acquired and/or a loan was taken out by the opter on the relevant property; and
• where applicable, a letter or deed of appointment to the role of Land and Property Act receiver or insolvency practitioner.

This change will also take effect from 1 February 2023. 

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