Opting to tax UK Property

Opting to Tax UK property

We are all undoubtedly living through some trying times so how nice that HMRC are giving us all another helping hand. If you are opting to tax UK property you now have much longer than normal to deal with the paperwork.

HMRC has temporarily extended the usual 30-day time limit for notifications to 90-days from the date the decision to opt was made. So while this is good news it does open up the possibility of forgetting to do anything about an option and that could be very bad news indeed.

If you decide to take advantage of the extension please make a note in your bfd diary to remind yourself to submit the notification form.

The extension applies to all decisions to opt to tax made between 15 February and 31 May 2020. You can read more about this by clicking on this link.

This does not alter the normal process of opting to tax, which is two-fold. Firstly you decide you are going to opt then secondly you notify HMRC of that decision. Only if both elements are handled in the right way and at the right time will an option to tax be treated as applying to the opted property.

The way to notify HMRC of an option ot tax is to complete a VAT 1614A which must be signed by an authorised person and sent to the Option to Tax Unit within the deadline period. It is this deadline date that has been pushed out by 60-days. You can either –

  • print, sign and send the notification form by post, or
  • email a scanned copy of the signed form to HMRC OTT Unit along with evidence (as below) that the signature on the form is from an authorised person.

Ordinarily an electronic signature would not be accepted but in response to Covid-19 limitations HMRC has temporarily changed the rules so the additional evidence to be sent with the notification might be:

  • an email from the normal authorised signatory to the person submitting the notification giving them authority to use the electronic signature
  • an email from the authorised signatory with the same sign off in the email and the form or
  • an email chain or a scan of correspondence showing the authority given by an authorised signatory.

The VAT rules surrounding opting to tax UK property and property transactions generally are terribly complex and should be guessed about. If you are ever at all unsure please check first, act second. Why not give us a call and please remember – sooner is always better.

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