Option to tax ― notifying HMRC and obtaining permission to opt

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

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.

For detailed commentary, see De Voil Indirect Tax Service V4.110Y.

How do I opt to tax and notify HMRC?

There are technically two stages to opting to tax:

•
the business makes the decision to opt (keeping a clear written record)
•
the business notifies HMRC of its decision to opt to tax

VATA 1994, Sch 10, Pt 1, 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

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