HMRC have published research on the impact of the VAT option to tax (more formally the election to waive exemption). among the key summary conclusions were :
- Where businesses used the option to tax for properties leased to tenants most opted all their leased property;
- Where businesses had sold property, they had generally chosen to opt all their sold properties.
- Among recipient businesses it was common for businesses to have both opted and non-opted property.
- For recipients about half of property leased from landlords was opted and around a fifth of purchased property.
- Recovering input tax is seen by tax agents as the key reason for opting.
- Tax agents felt that anti-avoidance rules in relation to the option to tax can be quite complicated and that this was an area that businesses often had limited understanding and hence could benefit from external advice;
The HMRC research paper no.315 is fully entitled: “Impact of the ‘option to tax’ measure: Research with recipients and suppliers of commercial land and buildings.” and can be found at the governments website at the following link: https://www.gov.uk/government/publications/impact-of-the-option-to-tax-measure
Tax Barrister, Accountant