In Wickford Development Co Ltd (Wickford) v HMRC [2020] TC07864, the First Tier Tribunal (FTT) found that VAT charged on roller blinds incorporated in the buildings was eligible for recovery as ‘building materials’.
Wickford, a developer, had claimed input VAT on the purchase of roller blinds which were fitted on new buildings on the basis that new homes are built and sold by developers, the supply is zero-rated for VAT purposes and the builder recovers VAT on the ‘building materials’ used.
- The building materials definition is materials ‘ordinarily’ incorporated in a new building that cannot be removed and replaced and these include built-in and fitted furniture, wired-in or plumbed-in appliances, flooring, etc.
- Developers are ‘blocked’ from deducting Input tax on goods such as appliances that are merely plugged in and furniture such as sofas, tables, and chairs etc.
HMRC disallowed the claim based on its guidance, Customs Brief 02/11 published on 25 January 2011, that stated that roller blinds do not qualify as 'building materials' and therefore input VAT is ‘blocked’. Assessments (and interest) of about £43,000 were raised by HMRC.
Wickford appealed to the FTT.
- Wickford gave evidence that the installation of blinds in new residential developments was increasingly commonplace.
- It pointed out that developer bespoke measured fitted blinds could not be easily removed without seriously damaging plaster within the windows, UPVC doors and door frames.
The FTT concluded:
- That manual window blinds are ‘building materials’ as they are ordinarily incorporated by builders in properties built as single-family dwellings.
- They should be zero-rated for VAT purposes and the input tax claim was allowed.
The FTT, further concluded that guidance in HMRC Brief 02/11 is incorrect. HMRC are now in the process of updating its guidance and have confirmed that they will not appeal this decision..
Useful guides on this topic
VAT: DIY Housebuilders Scheme
It is possible to recover VAT on constructing a new residential dwelling, or dwellings, even where there is no planned sale of the property.
VAT: Dwellings
What is the VAT treatment for construction, conversion, sale, and letting of a dwelling?
VAT: Land & property
An outline of the VAT treatment of some of the more common supplies of land and property.
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