HMRC have updated their information notice on the option to tax supplies of land and buildings. This notice explains the effect of an option to tax and outlines how to decide whether to exercise that option. It will tell you whether you need permission from HMRC before you can opt to tax. It also outlines changes to the option to tax rules introduced from 1 June 2008.

This notice replaces Information sheet 03/08 and notice 742A Opting to tax land and buildings (March 2002 edition) and outlines changes introduced with effect from 1 June 2008. The main changes are as follows.

• new rules providing that an option to tax affects land and buildings on the same site, with transitional rules, and ability to exclude new buildings from the scope of an option to tax
• new certificate for buildings to be converted to dwellings etc and new ability for intermediaries to disapply the option to tax
• new certificate for land sold to housing associations
• new rules for ceasing to be a relevant associate of an opter
• extension to the ‘cooling off’ period for revoking an option to tax
• introduction of automatic revocation of the option to tax where no interest has been held for 6 years
• introduction of rules governing the revocation of an option to tax after 20 years
• revised definition of occupation for the anti- avoidance test including new exclusion for automatic teller machines
• introduction of a new way to opt to tax (a real estate election)