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  • Writer's pictureAlan Smith

DULL BUT VERY IMPORTANT CHANGES TO OPTION TO TAX NOTIFICATIONS


Without much fanfare HMRC has today introduced significant changes to the processing of option to tax forms.

These changes have potential to cause problems for transactions involving Vat elected commercial property and land.

1. HMRC will no longer issue option to tax notification receipt letters.


  • Options to tax submitted by email will receive an automated response confirming the date when the notification was received. HMRC expect taxpayers to keep a copy of this email for at least 6 years as part of their business records.

  • Options to tax submitted by post will not receive any acknowledgement or receipt. Taxpayers and their advisers should ensure options to tax are submitted by email.


2. HMRC will no longer confirm the existence of an option to tax as it believes it is the taxpayer’s responsibility to keep such information as part of business records for 6 years.

HMRC will only respond if a request is made under one of the following conditions:


  • The effective opted date is likely to be over 6 years ago; or

  • The enquirer has been appointed as a Land and Property Act receiver, or an insolvency practitioner to administer the property in question


In combination these changes have the potential to cause serious problems. If the seller cannot produce the automated response email and the property has been opted to tax for less than 6 years, the purchaser, acting on the advice of their legal adviser, would most likely refuse to pay VAT on the purchase. The ultimate loser in this scenario being HMRC, as SDLT is chargeable on the purchase price inclusive of VAT.

A copy of the official announcement can be found at the following address:

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