The case of Rolldeen Estates Ltd in the First-Tier Tribunal (FTT) dealt with issues surrounding the validity of an option to tax (OTT), whether HMRC had the power to deem it valid, whether HMRC acted unreasonably, and whether the appellant was stopped from relying on an earlier meeting with an HMRC officer. The letting of property is usually exempt from VAT, but a landlord can choose to OTT and charge VAT on the supply. The appellant in this case had previously submitted an OTT form and charged VAT on rent to its tenant, but subsequently sold the property without charging VAT. HMRC issued an assessment for output tax on the sale value. The FTT found that the OTT was retrospectively validated, and the appeal was rejected. This case highlights the complexity and costliness of OTT, and the need for careful consideration and advice before making such a decision.
Source Marcus Ward
