Case: Electric blinds not ordinarily incorporated into eco-build home

[2019] UKFTT 0119

Judge Rachel Short, Mark Buffery

Decision released 16 February 2019

Value added tax – DIY housebuilders scheme – Electric blinds – Building material or electrical appliance – Ecobuild homes – Ordinarily incorporated – Appeal dismissed.

Cosham [2019] TC 06985

Summary

A person constructing a house can reclaim VAT on input tax incurred under the DIY house-builders scheme, VATA 1994, s. 35. Only those building materials incorporated into the building as described in VATA 1994, Sch. 8, Grp. 5, Note (22) are allowable under the scheme. Note 22 defined building materials as goods of a description ordinarily incorporated by builders in a building of that description, (or its site), excluding among others electrical appliances.

The Appellant argued that the electric blinds he installed were building materials ordinarily incorporated into buildings of that description, such as his eco-build home and fell within the definition of Note 22. Furthermore they were not electrical appliances and therefore excluded because their function was to control the temperature of a room. He disputed the comparator used for buildings of that description and that this should be other eco-build homes. His building was classed as a sustainable home for planning purposes and comparison should not be with lowest common denominator of generic home. The Appellant maintained that it was standard practice in eco homes to have electric blinds controlling room temperature and that trade journals confirmed this. However, he failed to produce evidence of this before the FTT. He also pointed out that roller blinds had been accepted as building materials in a tribunal hearing and that blinds could be treated as building materials when installed by charitable bodies, VAT Notice 708.

HMRC argued that the correct comparator building was a four bedroomed house. Electric blinds were not ordinarily installed in such buildings and therefore fell outside the definition of building materials in Note 22. HMRC also considered that electric blinds were electrical appliances and therefore excluded. The case to which the Appellant referred Price [2011] TC 00873 involved roller blinds and HMRC had disagreed with that decision by way of issuing a public notice, 02/2011.

The FTT took the Upper Tribunal (UT) case of Taylor Wimpey plc v R & Commrs [2017] BVC 505 as its lead authority. The UT suggested that the comparison test required was to consider the use rather than the quality of a building. The FTT viewed HMRC’s comparator test as too general and that eco buildings can be considered as a distinct type of building. However, the Appellant was unable to produce evidence that electric blinds were ordinarily installed into buildings of this type and for that reason the appeal must fail, see paragraph 44 of the decision. There was therefore no need to address the issue of whether the electric blinds were electrical appliances.

Comment

DIY cases are few and far between but this case has some interest in that it highlights how the FTT approached the question of what are building materials which is relevant in the construction industry. The FTT took a view that an eco-build home was a distinct type of building but ultimately the Appellant could not produce evidence that showed electric blinds were ordinarily incorporated into that type of building so the appeal failed.

For further commentary on goods ordinarily incorporated into buildings see our In-Depth commentary at ¶33-900 Incorporated ‘building materials’ and for the DIY scheme ¶38-010 Buildings qualifying for DIY scheme.

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