VAT – Option to Tax – Proposed changes

HMRC are fully aware of the current situation and asked for feedback towards the end of 2022 by way of a consultation on the processing of the Option to Tax Forms by the OTT National Unit. The intention of the consultation was to help identify the main issues with a view to return to pre-pandemic service levels.

Having considered the feedback provided, HMRC have decided to implement the following changes with effect from 1 February 2023: 

  1. HMRC will no longer issue OTT notification receipt letters. Most notifications are submitted to HMRC by e-mail. 
    • When notifying an OTT to you will receive an automated e-mail response. This should be retained. The date on the automated response from HMRC will confirm the date that the OTT was notified. Notifications submitted by post will not receive an acknowledgement or receipt. HMRC have confirmed that they will respond if further information in relation to the OTT is required.
  2. In most cases, HMRC will no longer respond to enquiries whereby the taxpayer is asking for confirmation of an existing option to tax. Such information forms part of the business records and should therefore be retained for a minimum of 6 years as per the HMRC guidance. HMRC have confirmed that if either of the following conditions are met, they will check their records to see if they have record of an OTT – 
    • The effective date of the OTT is likely to be more that 6 years ago, or
    • If you have been appointed as a Land and Property Act Receiver, or an Insolvency Practitioner to administer the property in question.

If either of the above conditions are met, a request to confirm that an Option to Tax is in place on the relevant property must be accompanied by a letter or deed of appointment of your role, otherwise HMRC may still refuse the request. They are doing this to ensure that businesses do everything possible before contacting HMRC.

You should also please provide the following details:

  • Name of the business/person who had opted to tax the property  
  • A VAT Registration Number (if applicable)  
  • The full address of the land/property in question, including postcode.  
  • The effective date of the option to tax if known
  • The date you first charged VAT on the opted land/property
  • The date the property was acquired and/or a loan was taken out by the opter on the relevant property

The next step

For more information, please contact Michelle Dale on, or your usual UHY adviser.

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