ICAEW.com works better with JavaScript enabled.

TAX NEWS

Further changes to VAT option to tax notification process

Article

Published: 04 Jan 2023 Update History

Notification receipt letters will no longer be issued with effect from 1 February 2023, says HMRC.

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. 

Read more

The Tax Faculty

ICAEW's Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

More support on tax

ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.

Sign up for TAXwireJoin the Tax Faculty

More from the Tax Faculty

Latest news
Making tax digital image
TAXwire

Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly enewsletter

Practical guidance
Cover
TAXline

Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.

Technical support
Tax Faculty image
Webinars

Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.