Readers’ forum: HMRC refusal to allow input tax on property purchase

I act for a printing business which purchased the freehold of new office premises for £400 000 plus VAT in April 2021.

At the time of the purchase the seller’s solicitor gave my client’s solicitor a copy of the VAT 1614A option to tax form supposedly submitted to HMRC the day before the sale with a covering letter that was posted to the department’s unit in Glasgow. This was treated as proof that the election had been made and therefore £80 000 of VAT was correctly charged on the sale.

However HMRC has since rejected my client’s clam for input tax on his June 2021 VAT return on the basis that the option to tax election was never received.

It has instructed my client to seek a VAT credit from the seller. This appears unfair and a big problem because the selling company is now in...