Option to tax ― when can an option be revoked?

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note looks at the circumstances under which an option to tax may be revoked.

For an overview of the option to tax more broadly, see the Option to tax ― overview guidance note.

In-depth commentary on the legislation concerning the revocation of the option to tax is found in De Voil Indirect Tax Service V4.115D.

Introduction to the revocation of the option to tax

The option to tax is normally a long-term decision and therefore not one to be taken lightly. The advantages and disadvantages should be weighed up carefully since once the option has been taken, the circumstances in which it can be revoked are narrow. These advantages and disadvantages are explored in the Option to tax ― deciding whether to opt guidance note.

Broadly, the situations in which the option to tax can be revoked can be divided into the following categories (the conditions of which are explored further in this guidance

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