Questions as to whether particular goods or services benefit from VAT zero-rating are perennially difficult to answer but can have profound financial implications. In a case on point, a First-tier Tribunal (FTT) ruling that blinds installed in new homes are zero-rated ‘building materials’ delivered a substantial tax saving to a property developer.
The developer was principally engaged in developing 1,600 new homes on a single site. It employed traditional building methods and provided fully finished homes to purchasers. Manual roller blinds were included in all-inclusive specifications to provide buyers with immediate privacy and as a small token towards enabling them to move in immediately and feel settled and secure in their new homes.
The developer argued that the blinds fell into the category of zero-rated building materials as defined by Note 22, Group 5, Schedule 8 of the Value Added Tax Act 1994. HM Revenue and Customs, however, took a different view and raised VAT demands against the developer totalling more than £40,000.
In upholding the developer’s appeal against those bills, the FTT found on the evidence that the blinds met the statutory definition of building materials in that they were goods of a description ordinarily incorporated by builders in properties constructed as single family dwellings. They were thus zero-rated for VAT purposes and the demands were overturned in their entirety.
