My thanks go to John Shearer of Mayell Shearer VAT consultants for advising me of this recent VAT case and this planning point.
A recent tribunal case has again highlighted the need to be able to identify what materials/fittings or fixtures a builder may include as supplied with his services during the construction of a new house, and hence are zero-rated. The rules also apply to DIY claimants who wish to recover VAT they have paid out.
The case revolved around roller blinds. The Tribunal ruled that roller blinds are building materials and hence the DIY claimant could recover VAT on the costs. HMRC does not agree but is not appealing. Whether one can rely on the Tribunal ruling, given HMRC’s refusal to accept, I cannot comment. Perhaps HMRC will turn a ‘blind eye’?
There are strict guidelines as to what items can be included in zero-rated supplies relating to the construction of new dwellings. However, one very interesting matter that is not commonly appreciated is that, even if a supplier cannot zero-rate the inclusion of some materials during the construction of a new house, he may be able to zero-rate his services so long as the service element is separately itemised on the invoice and the standard rate is applied to the item. This would apply, for example, to fitted carpets.