This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

VAT on fire and fireplace installed in new build before completion

campden6
Posts: 7
Joined: Tue Jul 20, 2010 11:43 am

VAT on fire and fireplace installed in new build before completion

Postby campden6 » Wed Nov 28, 2018 4:30 pm

We bought a new build house a year ago. The builder agreed a £2000 contribution to a gas fire and fireplace that was installed prior to completion. The builder insisted we use his supplier. The invoice was sent to the solicitor by the builder totalling £2452.00 A few days before completion our solicitor asked us for £452.00 We queried this as the net cost was £2043.33. We realised we were being charged VAT - although we had already had a discussion in the supplier's office about it being Zero rated because it was going to be installed before completion in a new build. We had to pay up as otherwise we could not complete.

I queried this with the builder because fires and fireplaces were articles 'ordinarily' incorporated in a building and should be Zero rated according to Notice 708. The builder disagreed - his reasoning was that because it was his supplier who had installed it (as opposed to his building company itself) we had to pay VAT. I don't think this can be correct because the builder paid the supplier, the builder paid the bulk of the cost and the builder arranged access etc.

I have queried this with the VAT Helpline but like any other HMRC office they don't give a concise answer. They have advised me to go to the supplier and state my case - asking the supplier to call the Helpline if they disagree. I want to be sure of my facts as it would be embarrassing to cause a fuss and eventually be proved wrong - or not right - which is a bit different.

robbob
Posts: 2726
Joined: Wed Aug 06, 2008 4:01 pm

Re: VAT on fire and fireplace installed in new build before completion

Postby robbob » Wed Nov 28, 2018 6:44 pm

~Hello campden6

I admire your tenacity here - i suspect the builder/supplier of the fireplace and vat office are being particularly unhelpful her.
contribution to a gas fire and fireplace that was installed prior to completion.
Ok firstup you may need to get the builder agree these goods were installed prior to completion - this would remove any doubt that they wouldn't be eligible based on date of occupation etc- sounds like this fact is a given.

[
quote]This reasoning was that because it was his supplier who had installed it (as opposed to his building company itself) we had to pay VAT. I don't think this can be correct because the builder paid the supplier, the builder paid the bulk of the cost and the builder arranged access etc.
[/quote]

Hmmmm

13.8.1 is clear that a fireplace and a heating system can be building materials and would therefore be fine with regard to all aspects of being zero rated with no input vat claims blocked for the contractor.

If your builder is billing you it seems clear cut to me that section 12.1 confirms he can zero rate the item and also reclaim any vat he was charged by his supplier - although the supplier could zero rate their work under 11.2.

So just point them back to 12.1 and 13.8.1 and at the same time confirm that it's not your problem in the first case as you as an individual confirmed with the builder that there would be no vat charged (date and time of conversation) and therefore the contracted price you agreed is all that you will pay whatever the vat outcome.

Note it's not particularly my area of speciality and notice 708 isn't the easiest to follow section to section without missing something in a different section- so there is possibly something i could be missing if this is the case hopefully someone else will be kind enough to correct me.

What is particularly is annoying is that the vat office won't confirm the answer - sometimes prodding them with the relvant subsections will make them change thjeir mind - you may want to ring them back though and ask why they have their doubts - i always worry if they have doubts. Note you should not accept an individual officers inability to understand the legislation as an excuse - generally ask for an experience technical officer or for a callback if they are being wishy washy.

If it turns out i have missed something that you find out later please update the thread for completeness thanks.

pawncob
Posts: 4248
Joined: Wed Aug 06, 2008 4:06 pm
Location: West Sussex

Re: VAT on fire and fireplace installed in new build before completion

Postby pawncob » Thu Nov 29, 2018 5:17 pm

As the builder only agreed a £2000 contribution to the cost, any excess cost should be borne by you, regardless of the VAT position. You should have agreed that he would meet the full cost.
It's the builder's fault for not agreeing with his subbie that it would be zero rated. He reclaimed the VAT as input tax and the net cost to him was VATless so he should have charged you (as he was the certifying main contractor) aVATless amount.
With a pinch of salt take what I say, but don't exceed your RDA

les35
Posts: 542
Joined: Wed Aug 06, 2008 3:09 pm

Re: VAT on fire and fireplace installed in new build before completion

Postby les35 » Fri Nov 30, 2018 12:11 pm

I would expect the installation of a fire place to be zero rated. It becomes part of the fabric of the building; it is 'ordinarily installed/incorporated.' The builder should have no problem with this. AND he should not charge you the VAT.


Return to “VAT & Excise Duties”