HMRC Updates VAT Notice 742A: Implications for Opting to Tax Land and Buildings

From 2014, when it was first published, up to this point by His Majesty's Revenue and Customs (HMRC), VAT Notice 742A was updated on several occasions, most of which took place in 2020 and 2021 due to COVID-19 and Brexit, respectively. This Notice explains what happens when someone opts to tax: charging VAT on land and buildings, when they need permission, and when to notify HMRC about the decision to opt.

After three years, HMRC has revised VAT Notice 742A, with specific updates in Section 4, which covers the process of opting to tax, and Section 7, which outlines the responsibilities associated with opting to tax.

What has Changed?

With the latest updates to Section 4, HMRC has made significant changes to the process of opting to tax. They have streamlined the process and are no longer sending an acknowledgment letter. Instead, once the notification is emailed, an automated response, including the date of receipt, is sent back. This change is crucial for you to be aware of, as it directly affects your operations. 

Another significant change is in section 7 of VAT Notice 742A. This section updates the list of authorized signatories. As explained in the Notice, an authorized person is typically an individual. However, in some instances, such as a partnership, the partners may be corporate entities. 

In such instances, the notification signatory should be an authorized representative of one of the corporate organizations. This change has implications for the signing authority in different business structures.

When sending an email notification regarding the option to tax, the sender should include the property address, postcode, and effective date of the notification. In the end, it is important to remember that VAT Notice 742A  is closely related to Land and Property VAT Notice 742 and that guidance issued by HMRC is based on the assumption that one has a working knowledge of basic VAT principles as outlined in the VAT guide (VAT Notice 700).

Source: HMRC Guidance Opting to tax land and buildings (VAT Notice 742A)