Revoking an option to tax

By Tolley

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

  • Revoking an option to tax
  • Six month cooling off period
  • Automatic revocation of an option where no interest has been held for more than six years
  • Revoking an option after twenty years

It is possible in certain circumstances for a business to effectively 'revoke' a valid option to tax. This guidance note provides an overview of the circumstances in which a business can revoke an option to tax and the procedure that must be followed.

VATA 1994, Sch 10, para 3(4) and 3(5); Notice 742A ; De Voil Indirect Tax Service V7.388 (subscription sensitive); SI 2008/1146
Six month cooling off period

It is possible for a business that has opted to revoke the option if it changes its mind within six months of making the election. .


The business must satisfy the following conditions before it can revoke the option to tax:

  • less than six months have elapsed since the day from which the option had effect
  • no VAT has become chargeable on a supply of the land as a result of the option (ie the business has not made any supplies of the property that would be liable to VAT since opting to tax)
  • the property has not been transferred as part of a transfer of a going concern since the business opted to tax (see the Overview of a transfer of a business as a going concern guidance note)

If the above conditions are satisfied, the business can request permission to revoke the option to tax from HMRC. The business will need to complete and submit a VAT1614C  in order to request permission to revoke the option to tax. If the business also satisfies the conditions below it does not require permission from HMRC in order to revoke.

These are the additional conditions that need to be satisfied before a business will be entitled to revoke the option to tax without obtaining prior permission from

More on Option to tax: