
Option to Tax Notification
Option to Tax Notification Where a seller is VAT registered and has opted to tax a building, the purchaser’s solicitor will usually request proof that the seller has opted to tax. The reason for this is that incorrectly charged VAT is not recoverable as input tax. What proof can the seller provide? The document usually […]
Option to Tax Notification
Where a seller is VAT registered and has opted to tax a building, the purchaser’s solicitor will usually request proof that the seller has opted to tax.
The reason for this is that incorrectly charged VAT is not recoverable as input tax.
What proof can the seller provide?
The document usually provided as evidence is a copy of HMRC’s letter acknowledging receipt of the seller’s option to tax.
However, from the 1st February 2023, HMRC will no longer be sending any letter confirming receipt or notification of an option to tax.
So, what proof can an opter provide now?
Section 4.2.4 of VAT Notice 742A (Opting to Tax Land and Buildings) confirms that an “option to tax has legal effect even if HMRC does not acknowledge receipt of your notification”.
Therefore, providing the option to tax has been notified to HMRC it has legal effect and so is ‘in place’.
If the option to tax notification is sent to HMRC’s National Option to Tax Unit using the email address given in that guidance, an automated response will be received showing the date the notifications was received. However, notifications sent in any other way will get no acknowledgement or receipt.
This automated email response plus a copy of the option to tax notification sent to HMRC should therefore be sufficient to prove that the option to tax has been notified.
If you have any questions or require our help please contact us at jane@deeksvat.co.uk