Get Vat1614h

An option to tax election is always made on land it then applies to any building that is constructed on the land apart from housing. So a new office block built on opted land is automatically covered by the original election.

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.

Although it is common to refer to a property when notifying an Option to Tax (OTT), an OTT actually applies to the land and includes the building standing on the land. It also applies to any buildings that are subsequently built on that land.

Once made, an option to tax can only be revoked in limited circumstances otherwise, it remains in place for 20 years. If the property has previously been leased out as exempt, then permission to opt may be required from HMRC.

An option to tax election is always made on land it then applies to any building that is constructed on the land apart from housing. So a new office block built on opted land is automatically covered by the original election.

The VAT 100 Report is used to prepare VAT returns for submission to HMRC. It is only applicable if your organisation is VAT registered with HMRC. ... Such amounts will have to be added manually before transcribing the Input and Output totals into the report to be submitted to HMRC.

Retrospective or backdated options This means that no option to tax can take effect from a date prior to the date on which the trader decided to make the election. This would be a backdated or retrospective option and HMRC has no discretion under the law to accept or acknowledge that it is valid.

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.

The main benefit of opting to tax a commercial property is the ability to recover input VAT on associated costs. Businesses that are using the commercial property as their trading premises, and are making taxable supplies in the course of their business, should be able to reclaim all input VAT in any case.