Option to Tax – Belated Notification

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This is a hardy perennial in the VAT garden!
The short FTT decision in Rowhildon Ltd illustrates the issue, and examines HMRC’s procedure in dealing with belated notifications.

The taxpayer had purchased a commercial property, and decided to Opt to Tax. But its notification on form VAT 1614A had not reached HMRC. The taxpayer sold the property within three months, charging VAT to the purchaser. This seemed to trigger HMRC’s enquiry. In due course, HMRC refused to accept their belated notification of their option.

A few points are worthy of mention:

  • If you decide to opt to tax, make a written note. This may be within the Minutes of a Directors’ meeting, or an internal email. Keep it!
  • Make sure your lease or sale contract explicitly refers to the option to tax. Commercial Property Standard Enquiries contain relevant wording to that effect. Use it!
  • On Appeal, the Tribunal can overturn HMRC’s refusal to accept the belated notification only if HMRC have acted unreasonably. See VAT Act 1994, s84(7ZA).

In this case, the Tribunal found in the taxpayer’s favour. You can read the decision here: http://financeandtax.decisions.tribunals.gov.uk//Aspx/view.aspx?id=10630

About Les Howard


Hi, I am a VAT Consultant, working mainly with charities. I am based in Cambridgeshire

I have over 20 years experience in VAT, and am currently also a part-time member of the Tax Tribunals.


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