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      Covid-19: option to tax notification deadline extended

      15 May 2020 by Charlotte Burmby

      Charlotte Burmby
      option to tax

      HMRC have temporarily extended the deadline for notifying it of an option to tax land and buildings from the normal time limit of 30 days, to 90 days from the date the decision to make the option is made. This 90-day time limit will apply if the decision to opt to tax is made between 15th February 2020 and 31st May 2020.

      What is an option to tax?

      Most property transactions are exempt from VAT, meaning no VAT is charged on a sale or letting.  This does, however, mean that you cannot recover the VAT incurred on building works, fees, and other expenditure in connection with the property – that is a separate issue. There is, therefore, an “option to tax” (also known as “an election to waive exemption”) the property so that it is standard-rated. This means that once you are VAT-registered ( and there are rules relating to that, which your accountant can help you with), VAT would be charged on a sale or letting, and you would be able to recover VAT on most building work, fees and other expenditure in connection with the property.

      If the property is opted to tax, this option applies to all future dealings with the property (unless there is a specific reason for it not to apply to a transaction), unless the option lapses or is revoked. However, the option to tax is generally personal and does not transfer with the property on sale. Therefore, if the seller of a property has opted to tax the building, you will not obtain the benefit of this option once the purchase has completed. To also benefit from the option to tax you would need to notify HMRC of your decision to opt to tax the building.

      There are however many exemptions and special rules in relation to the option to tax for VAT groups, partnerships, and trusts, etc, and advice should, therefore, be taken from your accountant in relation to the option to tax.

      For help on the issues raised in the above article, please contact the Fisher Jones Greenwood on 01206 700113 or alternatively, please email [email protected].

      Or for more information on issues that have arisen as a result of the Coronavirus: COVID-19 pandemic, take a look at our Coronavirus Legal Advice hub.

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      Fisher Jones Greenwood is the trading name of Fisher Jones Greenwood LLP, a Limited Liability Partnership authorised and regulated by the Solicitors Regulation Authority and registered in England ( Number: OC305854 ). A list of members is available for inspection at the registered office at Charter Court, Newcomen Way, Colchester Business Park, Colchester, Essex CO4 9YA

      We are open for business and working remotely

      Here at Fisher Jones Greenwood Solicitors we would like to reassure all our existing and future clients that even in these uncertain and difficult times we are able to assist you with your current and future legal requirements.

      Like so many others, we are constantly monitoring and acting on Government advice and guidelines and as such our offices are temporarily closed to the public. You may, if you wish, visit our offices to post any correspondence and documents through letter boxes.

      As a result of our commitment to innovation and technology, we can and are maintaining a full service, albeit remotely, with all appointments being held digitally or via the telephone. Our case management system enables us to have full access to your electronic file from any location and we have a core team of staff processing all incoming post directly onto your file so that your legal adviser can continue to work with you. We are pleased to say that we do not currently anticipate any disruption to your matter.

      Please do not hesitate to contact your legal adviser by email or by telephone should you have any worries or concerns. Alternatively, please call our main switchboard number (01206 835300) and a message to return your call will be by relayed to the relevant person.

      Finally, everyone at FJG would like to wish you, your families and your colleagues well throughout this current crisis.

      Best wishes
      Paula Cameron
      Managing Partner