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VAT: Option to Tax – changes from 1st February 2023

Further changes to the Option to Tax (OTT) process

11 Jan 2023

HMRC have announced the further changes to the Option to Tax (OTT) process. The option to tax (OTT) is an election to waive the land exemption and instead to charge VAT at the standard-rate on the supply of land and buildings.

Option to Tax notification – New applications

From 1 February 2023, HMRC will stop issuing Option to Tax notification receipt letters. Instead, HMRC will only provide an electronic confirmation for an OTT application which is emailed directly to HMRC official email address:

The automatic response will be sent to the sender’s email address and should be retained for the confirmation for the date of notifying HMRC of the OTT.

OTT notifications submitted by other means will not receive any acknowledgement from HMRC unfortunately.

Confirmation of existing Option to Tax notifications

From 1 February 2023, HMRC will also stop processing requests to confirm the existence of an existing Option to Tax, except under limited circumstances: –

  • The effective opted date is likely to be over six years ago; or
  • The request is made by a Land and Property Act receiver or an insolvency practitioner, to administer the property in question.

If 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 along with 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

Where there is any doubt or concern about the existence of an OTT which may have been exercised within the last six years, it is strongly advised to make an OTT confirmation request with HMRC before the change in policy (effective from 1st February 2023).

If you have require advice on Option to Tax, or any aspect of VAT please contact us.

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