VAT refund opportunity for property developers and housebuilders
Here our VAT specialist Carolyn Van Hecke explains how a recent VAT tribunal decision may provide an opportunity for housebuilders.
In a recent VAT Tribunal case a property developer has been successful in arguing that VAT is recoverable on the cost of buying blinds which were incorporated into new homes. In other words the VAT should not be treated in the same way as other “blocked” items including white goods, carpets and furniture.
The tribunal heard that blinds, along with their fixings, were installed as one unit and were not easily removable. If they were to be removed, this would damage the UPVC window frames, and the plaster within the window reveals, which would both need extensive repairs. Therefore they had been “incorporated” into the building.
The developer also argued that the use of blinds in new-build residential properties is “ordinary” and increasingly prevalent. The company gave evidence that it had installed blinds as standard in all of its homes since 2015.
The result of this decision is that developers and housebuilders who have not recovered input tax on manually operated blinds installed in new homes should calculate underclaimed input tax within the last four years and consider making a retrospective protective claim.
The ruling will also impact on self-builders who have been previously denied VAT recovery on the purchase of manually operated blinds.
We understand that HMRC accepts the decision will have an impact on their policy and they are reviewing the position regarding the installation of fitted blinds. The guidance will be updated in due course.
If you would like assistance with lodging a protective claim, please contact Carolyn.VanHecke@cowgills.co.uk who will be pleased to assist.
The information was correct at time of publishing but may now be out of date.