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Option to tax: Was there a valid option to tax in place?

By Andrew Needham, June 2023

The appellant purported to opt to tax (OTT) two properties, one a commercial building and the other a piece of bare land, in 2008 and stated that it had not made previous exempt supplies of either. HM Revenue and Customs (HMRC) acknowledged the options and the appellant charged VAT on the rents. The appellant subsequently sold both properties but did not charge VAT. HMRC assessed the appellant, but it argued that the options to tax were not valid as they had previously made exempt supplies of the properties and HMRC had not given permission. HMRC wrote to the appellant, exercising its discretion under VATA 1994, Sch 10, para 30, to treat the options as valid. 

At the start of the hearing, the appellant conceded that there had not been any prior exempt supplies of the bare land and that part of the assessment was valid. The appellant argued that VATA 1994, Sch 10 was rewritten with effect from 1 June 2008, and the rewritten provisions included para 30;

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