Can HMRC refuse an option to tax?
HMRC have discretion to accept a late notification of the option to tax where it is clear that the taxpayer made the decision to opt to tax at the time specified, are not exercising that option retrospectively, and there is no good reason to refuse.
Can you opt to tax at any time?
You can opt to tax one property at a time or all of the properties you own – it’s your choice.
Can an individual opt to tax a property?
Individuals and businesses with land/buildings may benefit from opting to tax the property for VAT. Furthermore, there may be tax implications to consider when acquiring or selling land/buildings that are already opted to tax.
Can you Disapply an option to tax?
A disapplication of the option to tax may apply in circumstances where the property is intended to be designed or adapted, and/or is intended for use as a dwelling or number of dwellings; intended to be used for another residential building i.e care homes or student accommodation, intended for use for a charitable …
Does an option to tax run with the land?
Land that is opted to tax
HMRC considers that a valid option to tax will cover all of the land and any buildings and / or civil engineering works which are part of the land. The option to tax will be limited to the specific area of land specified in the notification submitted to HMRC.
When did option to tax start?
The option to tax rules were introduced on 1 August 1989, so with each day that passes, more elections will have passed the 20 year time period.
What does opting to tax mean?
The option to tax means the owner has to charge VAT on rental or sale of the property. The main advantages are. 1) The main reason for opting to tax is that VAT on costs e.g. a refurbishment can be recovered whereas without an option the VAT would not be recoverable.
Can you opt to tax without being VAT registered?
1.2 The effect an option to tax has
This means that no VAT is payable, but the person making the supply cannot normally recover any of the VAT incurred on their own expenses. But you can opt to tax land. … You do not need to own the land in order to opt to tax.
How do you know if a property is opted to tax?
A good starting point is the age of the commercial building. If it is under 3 years old then it will be in the VAT system and opted to tax. Next, what is the main business activity of the current owner? If they currently charge VAT in their normal course of business, then they are likely to have opted to tax.
What is a transfer of going concern?
A transfer of a business as a going concern (TOGC) however is the sale of a business including assets which must be treated as a matter of law, as ‘neither a supply of goods nor a supply of services’ by virtue of meeting certain conditions.
Can a business recover VAT incurred before opting to tax?
VAT incurred prior to exercising the option to tax cannot be recovered, unless it related to costs incurred strictly in connection with the supply of the opted property (its sale or letting).
Do I need permission to opt to tax?
Unless the business meets the conditions under which HMRC can grant automatic permission to opt to tax land and buildings, it will be necessary for the business to obtain permission to opt to tax.
Why do you need an option to tax?
The option to tax allows a business to charge VAT on the sale or rental of commercial property, or in other words, to make a taxable supply from what otherwise would be a VAT exempt supply.
Why would you elect a property for VAT?
Electing to charge VAT on property transactions
Suppliers can often elect to charge VAT on commercial property transactions in order to recover any VAT incurred on goods and services that have been supplied to the business previously; this is also known as input tax.