Andrew Needham looks at the requirements businesses need to fulfil in order to revoke the option to tax after 20 years.
The sale and rental of a commercial property is normally exempt from VAT under VATA 1994, Sch 9, Gp 1. The option to tax under VATA 1994, Sch 10 allows a business to choose to charge VAT on the sale or rental of commercial property. Any option to tax does not affect a residential building or residential part of a building.
An initial six-month cooling-off period is allowed, during which a business can withdraw the option, subject to the written consent of HMRC. After that, the option is irrevocable for 20 years.
Disapplication of the option to tax after 20 years
After 20 years, a business can decide to revoke its option to tax by completing a Form VAT 1614J and sending it to HMRC. However, there are five conditions that need to be fulfilled. If
