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HMRC internal manual

VAT Land and Property

Option to tax: disclosure of an option to tax to a third party

Where a lender or receiver is selling a property in satisfaction of an unpaid debt by a taxpayer, the lender or receiver must account for the output tax on the sale on behalf of the taxpayer (if output tax is due) under special accounting arrangements (see Notice 700/56 Insolvency for details). However, in certain cases, the lender may not be able to establish whether the property is subject to an option to tax, because the taxpayer is insolvent or has disappeared.

Where a definite record of an option to tax exists, this information can be disclosed to a lender or receiver in this position. This must be done in writing. However, in cases where evidence of an option cannot be found, you should inform the enquirer in writing that, whilst no record of an option is held, this does not necessarily mean that one was not made.