VAT1614A: notifying HMRC of an option to tax land and buildings

Who needs it

• VAT-registered businesses that decide to opt to tax a piece of land or a building, usually commercial property they let or sell.
• Businesses buying property already opted to tax that want to make their own option: an option binds only the person who makes it.
• Anyone who needs permission first (exempt supplies of the property in the previous 10 years) notifies on VAT1614A once permission is given, or relies on an automatic permission condition.

What you need before you start

• The address or description of the land or building, and a map or plan for discrete areas of land.
• The date of your decision and the date the option is to take effect (it can't be earlier than the decision).
• The name and capacity of the person signing.
• Form VAT1614H and evidence, if you need HMRC's prior permission.

How to file VAT1614A

1. 1Check whether you need permission: if you've made, or intend to make, exempt supplies of the property in the 10 years before the option, apply on VAT1614H unless an automatic permission condition in VAT Notice 742A applies.
2. 2Record your decision to opt and its date.
3. 3Complete VAT1614A on screen and print it. It must be filled in fully before printing; it can't be part-saved.
4. 4Email it to optiontotaxnationalunit@hmrc.gov.uk if you're VAT-registered, or post it, within 30 days of the decision.
5. 5Keep HMRC's automated email reply and your decision records for at least 6 years.

What opting to tax does

Under VAT Notice 742A, once you opt to tax, the supplies you make of your interest in that property are normally standard-rated, and you can normally recover the VAT on related costs. It binds only your own supplies: a buyer or tenant decides for themselves.

An option normally can't be revoked until 20 years have passed (on VAT1614J), except within a 6-month cooling-off period on VAT1614C if the conditions are met. It's revoked automatically if you've held no interest in the property for 6 years in a row.

Notifying HMRC

Notice 742A says you must normally notify the option within 30 days of your decision, using VAT1614A. The option takes effect from the decision date or a later date you choose, never earlier.

If you're VAT-registered, email the form to optiontotaxnationalunit@hmrc.gov.uk; post is accepted too. HMRC no longer sends acknowledgement letters. Emails get an automated reply, which you should keep, and the option is valid without an acknowledgement.

When you need permission first

You need HMRC's permission, on VAT1614H, if you've made or intend to make exempt supplies of the property in the 10 years before the option takes effect, unless one of four automatic permission conditions in Notice 742A applies. If you meet one, you still notify on VAT1614A but don't need prior permission.

VAT1614A sits in a family of related forms: VAT1614B to stop being a relevant associate, VAT1614D to disapply the option for buildings converted into dwellings, VAT1614G for land sold to housing associations, VAT1614E for a real estate election and VAT1614F to exclude a new building.

Common mistakes

• Notifying late. HMRC accepts a late notification only with evidence the decision was made in time.
• Skipping permission when exempt supplies were made in the last 10 years. The option may then be invalid.
• Waiting for an acknowledgement letter. HMRC no longer sends them; keep the automated email reply instead.
• Assuming a seller's option covers the buyer. Each owner makes their own choice.