Option to tax ― notifying HMRC and obtaining permission to opt

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Option to tax ― notifying HMRC and obtaining permission to opt
  • How do I opt to tax and notify HMRC?
  • Form of the notification
  • Time limits for notifying the option to tax and belated notifications
  • Permission to opt
  • When is there automatic permission to opt to tax?
  • Automatic condition 1
  • Automatic condition 2
  • Automatic condition 3
  • Automatic condition 4
  • More...

Option to tax ― notifying HMRC and obtaining permission to opt

This guidance note looks at how a business should notify HMRC of its decision to opt to tax land and buildings. It also examines when a business has automatic permission to opt and when permission must be sought from HMRC.

For an overview of the option to tax more broadly, see the Option to tax ― overview guidance note.

In-depth commentary on the legislation concerning the notification of the option to tax is found in De Voil Indirect Tax Service V4.115C.

How do I opt to tax and notify HMRC?

There are technically two stages to opting to tax:

  1. the business makes the decision to opt (keeping a clear written record)

  2. the business notifies HMRC of its decision to opt to tax

VATA 1994, Sch 10, paras 18–20; Notice 742A, para 4.1; VATLP22360

The decision to opt will often be made at a board meeting or similar with the written record being minutes of the board meeting which clearly stipulate what is to be covered by the option (more details on the coverage of the option can be found in the Option to tax ― what is covered by an option? guidance note).

Form of the notification

Whilst not technically required in law, it is generally advisable to notify the option using form VAT1614A as this will help to ensure that HMRC has all the information required. It is also important to include maps / plans clearly showing the opted land within the notification where discrete areas

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