VAT Query on new build

VAT Query on new build

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Hi all

I have a client who supplies and fits all different types of flooring to both domestic and commercial customers, carpets, wooden flooring, tiled floors etc.

They have recently completed a job for a builder on a new build residential property, I believe it's a nursing home.

On this job they have supplied and fitted both carpets and vinyl safety flooring throughout the building.

My client had sent in the invoice including 20% VAT but the builder has come back and said that the invoice should be zero rated as the work is on a new build. I have tried contacting the VAT helpline but I can't get through as they are so busy.

It is my understanding that even though it's a new build the supply an fit of carpets should be charged at the standard rate (20%) but I'm not sure about the vinyl safety flooring?

The builder is adamant that the whole invoice should be zero rated??

Can anyone help from there experience/knowledge before I try HMRC again?

Many thanks

Replies (2)

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chips_at_mattersey
By Les Howard
29th May 2015 20:06

carpets & floor covering

Fitting of carpets are standard rated, floor covering affixed to the floor is zero rated.

Notice 708, para 13.7 refers.

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By spidersong
01st Jun 2015 11:43

Dwelling or 'Relevant Residential'

I think you'll need some clarity on why zero rating may apply:

If ZR applies because the builidng will be a dwelling (i.e. it will consist of self contained living accomodation) then Les' answer goes far enough, carpets in a new dwelling aren't builders materials and so aren't zero rated, vinyl/fixed flooring is.

However if this is a nursing home then I suspect it's not self contained living accomodation (e.g. each resident has their own kitchen, bathroom etc, and the units could all be sold separately) but instead the main contractor is zero rating it as a 'relevant residential building'. Note 12 of Group 5 to Schedule 8 of the VAT Act says zero rating only applies to relevant residential buildings where the supply is made to the person who will utilise the building for the purpose. This means that sub-contractors cannot zero rate their supplies for these types of building, only direct contractors can.

So if this is indeed a nursing home, and the work is being done for the primary contractor rather than direct for the owner/operator, then zero rating wouldn't apply to any subbies invoices and your client was correct to charge VAT on the whole lot, it's for the main contractor to claim this VAT back and zero rate their onward supply.

See sections 2.1.3 and 17.4 of the notice Les mentions.

Thanks (1)