Zero-rating the construction of buildings: are my services supplied ‘in the course of the construction’ of the building: snagging
Snagging is the carrying out of remedial works to correct faulty workmanship or replace faulty materials. Normally these works are carried out by the original contractor under the terms of the original contract and so are not seen as a separate supply of construction services.
However, circumstances may arise where the original contractor is not able to carry out the remedial works and another is contracted to carry out the works. This is seen as a separate supply of construction services:
- if this is made before completion of the building, it is a supply ‘in the course of construction’ and is eligible for the zero rate
- if this is made after completion, it is not a supply ‘in the course of construction’ and is ineligible for the zero rate.
However, following the Tribunal decision in Mr and Mrs James (VTD 20426), there may be circumstances where the defect is so bad that even though the building may now be occupied and a Certificate of Completion issued, the building can’t be said to be complete or fit for purpose. In such circumstances, we accept that the supply of remedial works is a supply ‘in the course of construction’ and eligible for the zero rate so long as it is made at the earliest practicable opportunity.