New year, new rules from HMRC

HMRC have announced that from 1 February 2023, they will no longer confirm that an option to tax is in place when requested, except in certain circumstances, or issue VAT option to tax notification receipt letters.

Under current regulations, businesses are required to retain their VAT records, including options to tax, for six years. Many businesses keep all their VAT records for longer than this as a seller will be required to evidence their option to tax if they decide to sell their business property in the future. Failing this, if your records are incomplete, you can apply to HMRC for confirmation that an option to tax is in place.

However, the changes from 1 February 2023 mean that HMRC will no longer confirm the existence of an option to tax if requested, unless:

• The effective opted date is likely to be over six years ago
• The person making the request is a receiver or an insolvency practitioner who is administering the property

Furthermore, from 1 February 2023 you will only receive a confirmation from HMRC when applying for an option to tax via email. This confirmation will be in the form of an automated email. If you apply by any other method, HMRC will not issue a confirmation. It is therefore a good idea to keep this automated confirmation email from HMRC safely in your VAT records for future reference.