13 October 2016
HMRC are currently focusing their investigative skills on garage door suppliers and installers, specifically the VAT treatment of certain items. As part of this effort, a special email address has been set up to deal with these enquiries.
Services supplied in connection with the construction of new dwellings are zero rated supplies for VAT purposes. This includes both work on the dwelling itself, and other services and building materials closely connected to the construction of the building. For zero rating to apply, the services/goods need to be provided prior to completion of the dwelling.
Construction of a garage can fall within the zero rated services, provided it is constructed at the same time as, and it is intended that it will be occupied with, the qualifying building. So, on the face of it, the installation of garage doors can be zero rated.
So, is it that simple?
Qualifying building materials are defined as goods which are ordinarily incorporated by builders in a dwelling. HMRC guidance (VAT notice 708) states that items which are specifically excluded from this include electrical components for garage doors and gates.
Therefore, the installation of standard garage doors in relation to new builds can be zero rated for VAT purposes, but the electrical items need to be standard rated. HMRC have set up a task force to investigate and assess businesses that have been making zero rated supplies (easily checked by applying 20% to box 6 of the VAT return and seeing if it agrees to box 1).
We have advised our clients on this matter, as well as a host of other VAT supply issues. If you have any concerns about the VAT rating of supplies you make, or, even worse, HMRC has been in touch on this subject, we would be happy to advise you.
For more information on the issues discussed in this blog, please contact your local UHY adviser.