Late notification of option to tax election

The circumstances in this appeal were unusual – a standard property transaction became complicated because the advisers did not deal properly with the taxpayer’s option to tax election. The case related to the purchase and sale of a public house in the same VAT period ending July 2014. The taxpayer bought it for £1.3m plus £234 000 VAT (VAT was charged on 90% of proceeds presumably because there was a residential flat on the premises) and he sold it for £1.8m plus £360 000 VAT. The taxpayer should have notified HMRC about an option to tax election on the property before it was sold on form VAT 1614A then his VAT charge would have been correct and his input tax claim would have been allowed on the purchase price. The net payment of tax to HMRC would have been £126 000 on his July 2014...