VAT – Option to Tax – changes
A number of changes to the option to tax rules have taken effect from 1 August 2009 following earlier consultations with businesses. The changes are intended to make the option to tax rules more flexible and to counter tax avoidance.
The main changes are as follows:
- A change in the rules as to when a body ceases to be a relevant associate. This change is intended to tackle abusive tax avoidance.
- To provide taxpayers who have made a Real Estate Election with greater certainty as to the date from which the option to tax will be treated as having been made.
- To make it easier for some taxpayers to revoke the option to tax after 20 years.
- An extension to the time limit for notifying HMRC of a wish to exclude from the option a new building constructed on land where an option to tax is in force.
HMRC are expected to update the relevant Public Notice 742A, which deals with the option to tax, later this year.