Late option to tax election

The company bought a building on 30 June 2016 and next day completed form VAT1614A (notification of an option to tax). HMRC said it did not receive it despite the taxpayer being adamant that it was posted on 4 July. The problem came to light in October 2016 on a VAT compliance visit. HMRC said it would backdate the election to 16 September 2016 when the building was sold but not the earlier date of 1 July 2016 as claimed by the taxpayer.

The regulations require a business to notify an option to tax election to HMRC – usually by completing form VAT1614A – within 30 days of the decision. It will allow a late notification if it is satisfied that the taxpayer had decided to opt to tax on the date requested.

The taxpayer kept a copy of the VAT1614A form. It said HMRC’s system did not allow...