HMRC changes in processing option to tax form
From 1 February 2023, HM Revenue and Customs (HMRC) will no longer confirm the existence of an option to tax when requested to do so by property owners or solicitors, except in specific circumstances. These circumstances are limited to where the option to tax was likely to have been notified more than 6 years ago or if the enquiry is from an appointed receiver or insolvency practitioner administering the property in question.
In addition, HMRC will no longer issue option to tax acknowledgement letters once an option to tax has been notified. Property owners will therefore need to keep a record of the notification of their option to tax and we strongly recommend that all notifications are sent to HMRC via email to: optiontotaxnationalunit@hmrc.gov.uk. The email should include in the subject line the full property address and the effective date of the option to tax. This is because an automated response to the email will be received, which can be used as evidence that the option to tax has been notified to HMRC. Property owners and businesses are currently required to keep their VAT records, including options to tax, for six years, however, we advise that these records will now need to be kept throughout the ownership of the property in question to ensure that the correct tax treatment is applied on a sale or lease.
You can read more about the changes on the Goverment website here.
Chat to the Author, Kay Piper
Partner, Commercial Property, Bishop's Stortford office
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Legal 500 UK 2023
"I have worked with Tees Law partner Kay Piper for years now. She has prepared and helped me with all the legal aspects of buying properties, freeholds and building disputes and I cannot recommend her service and work more highly. She is thorough, insightful and her work exudes confidence and expertise."
Legal 500 UK 2021
‘I have worked with Kay Piper on a number of transactions and found her to have a very straightforward and common sense approach with a keen appreciation of the commercial aspects of a deal.’
Legal 500 UK 2021
‘Kay Piper is friendly and approachable whilst remaining professional. She is easy to contact and methodical in her work.’
Legal 500 UK 2021
‘Kay Piper’s work is comprehensive, clear, and goes above and beyond – always. She is always incredibly helpful, ensures she keeps me informed of all stages, and I am never unsure of where I stand legally. I have had to use other solicitors previously and have always found the experience slightly anxiety-ridden – not so with Kay. I would simply not consider using another solicitor while she is still working.’
Richard
London
Thank you for all your advice and work on the sale of the flat. As ever, you were a calm, reassuring and knowledgeable presence throughout the entire sale process. Our estate agents also praised you several times for your efficiency and promptness of response.