VAT option to tax: changes to the notification process

HMRC will no longer issue option to tax notification receipt letters from 1 February 2023.

Supplies of land and buildings are normally exempt from VAT, but it is possible to opt to tax the land/property which may allow some recovery on expenses if VAT is charged on the supply.

Notification of an option to tax is (OTT) usually sent to HMRC via an email, to optiontotaxnationalunit@hmrc.gov.uk

From 1 February 2022, the only receipt provided by HMRC for an OTT will be the automated email response provided when a notification is sent to the above email address.

Businesses should keep this automated response as part of their VAT records. The date on the response will confirm the date that HMRC has been notified. The responsibility for ensuring the OTT notification is correct and valid remains with the opter.

Confirming existing OTT notifications

HMRC have confirmed that it will no longer process requests confirming the existence of an OTT, except if:

• The OTT date is over six years ago
• The request is made by a Land and Property Act receiver or insolvency practitioner, to administer the property in question

If these conditions are met HMRC must be provided with:

• Name of the opter of the property
• VAT registration number
• Full address of the property and effective date of OTT
• Date VAT was first charged on the property
• Date the property was acquired

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