VAT – Changes to the option to tax
A number of changes to the operation of the option to tax and updated definitions of housing associations took effect from 1 April 2010. The changes were largely intended to facilitate the use of the option to tax by businesses.
The three main changes were:
- The occupation of minor parts of buildings (no more than 10%) by persons financing construction work will be disregarded for the purposes of the option to tax anti-avoidance provisions.
- The “cooling-off” period rules that allow a taxpayer to revoke an option to tax have changed. The new rules remove the requirement that the land must not have been used in the period between the option to tax being made and revoked.
- The definition of a ‘relevant housing association’ has been amended following the enactment of the Housing and Regeneration Act 2008. This minor change will ensure that English housing associations continue to be treated in the same way as housing associations in the rest of the UK.
HMRC have released a new Revenue & Customs Brief (08/10) and a VAT information sheet (02/10) to provide further details of HMRC’s procedures and policies in relation to the changes.