In November 2022, HMRC consulted informally through the Joint VAT Consultative Committee on changes to the process for notification of options to tax. HMRC has now provided its response to this consultation and also recently published Revenue and Customs Brief 1 (2023): changes in processing option to tax forms by the option to tax national unit which sets out the changes which will take effect from 1 February 2023.
HMRC’s response to the consultation is set out in more detail below.
“Response to Consultation on potential Changes to the Processing of Option to Tax (OTT) Forms by the OTT National Unit
Thank you for your time in responding to the recent Option to Tax (OTT) consultation. The consultation period ended on 28 November 2022. Since then, we have carefully considered the feedback provided.
We have decided to implement the proposed changes:
OTT Notification
HMRC will stop issuing Option to Tax Notification Receipt letters from 1 February 2023.
Within a Notification of an Option to Tax, the correct and valid option has been and remains the responsibility of the opter.
When a Notification of Option to Tax is submitted to optiontotaxnationalunit@hmrc.gov.uk you will receive an automated email response. You should keep this automated response for your records. The date on the automated response will confirm to you the date HMRC has been notified.
A Notification sent by any other means will not receive an acknowledgement or receipt. We will however respond if further information is required.
OTT Charter
HMRC will stop processing requests confirming the existence of an Option to Tax, unless under certain circumstances* (see below).
We remind you, that information such as this forms part of the business record and should be kept for 6 years as stated in HMRC’s guidance.
See VAT notice 700/21 (section 2): https://www.gov.uk/guidance/record-keeping-for-vat-notice-70021#record--rules-for-all-vat-registered-businesses and https://www.gov.uk/charge-reclaim-record-vat/keeping-vat-records
*If a request is made under one of the following conditions, then HMRC will check to see if we hold a record of an Option to Tax for the relevant property.
- The effective opted date is likely to be over 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 these 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 we are unable to assist.
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; and
- The date the property was acquired and/or a loan was taken out by the opter on the relevant property.
The changes will go ahead from 1 February 2023.”