Changes to HMRC acknowledgements of options to tax

What has changed?

It has been the practice of HMRC to send written acknowledgements when options to tax have been notified.

There was no legal requirement to issue these acknowledgements, and it has always been the case that if an option to tax has been properly notified to HMRC it is legally in place, with or without a written acknowledgement.

With effect from 1 February 2023, HMRC will stop sending written acknowledgements of options to tax.

What do I need to do now?

Under the new arrangements, notifications of options to tax should be submitted via email to HMRC. If you need to check what details are required from you for submission, please speak with our VAT team at M+A Partners who will be pleased to confirm this for you.

The automated response you get to this email will have the date HMRC received it. The notification and the HMRC receipt will provide the evidence that you have opted to tax. These must be retained as part of your VAT records.

What does this mean for me?

Whilst the normal requirement for keeping records is six years, options to tax last a minimum of twenty years.

It is strongly recommended that you should retain evidence of opting tax for as long as you have an interest in the land or property.

Under these new arrangements, HMRC will not respond to any requests for confirmation of whether land or property has been opted to tax unless the option was likely to have been made over six years ago.

So it is now more important than ever to ensure that you keep records of any options to tax that you make.

Read more:

• Changes in processing option to tax forms