• Option to tax on land and buildings – new (temporary) time limit and rules for notifying HMRC

Option to tax on land and buildings – new (temporary) time limit and rules for notifying HMRC

05 July 2021

Original content provided by BDO United Kingdom

As a result of social distancing measures following COVID-19, HMRC has announced some changes to the option to tax time limits and rules.

Extension of the time limits to notify an option to tax

An option to tax is a decision made by an organisation to reflect that its interest in specific buildings or land should generally be viewed as taxable and that, subject to a number of detailed rules, future supplies of interests in that land or property, will be subject to VAT.

The rules are detailed and can be complicated in some circumstances but the decision that has been made by the business is only effective if HMRC are informed of the decision within 30 days.

Due to the issues with social distancing, HMRC has recognised that this may be problematic and have announced that for option to tax decisions made between the 15 February 2020 and 31 July 2021, the time limit will be extended to 90 days.

How to notify an option to tax

The option to tax form can be found on HMRC’s website and can be submitted with an electronic signature, but HMRC has suggested that it will also require evidence that the signature is from someone authorised to make the option on behalf of the business.

HMRC has indicated that it will accept that this evidence has been provided, where the form is submitted:

  • With an email from the authorised signatory to the sender within the nosiness giving authority to use their electronic signature
  • From the authorised signatory with their sign off in the e mail and the form. or
  • With an e mail chain or scanned correspondence showing the authority being given.

Where an agent is sending the option on the organisations behalf, they will need to send proof that:

  • The signature is from a person authorised to make the option on behalf of the organisation, or
  • That authority has been granted to the agent to use the electronic signature.

Once again, this can take the form of an e mail or chain of e mails providing authority or a scan of the relevant correspondence.

For help and advice on making an option to tax please get in touch with our BDO VAT expert Will Tipping.