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HMRC internal manual

VAT Construction

Building materials - developers and the ‘Blocking Order’: show houses

The ‘Blocking Order’ applies to a person who constructs, or effects any works to, a building ‘for the purpose of making a grant of a major interest in it’.

Although a show house is used to promote a developer’s products, it is normally the case that it will be sold at the end of the development. The ‘Blocking Order’, therefore, applies to goods incorporated in show houses in the same way it applies to other houses.

The ‘Blocking Order’ doesn’t apply to goods that are not incorporated in the building, such as loose furniture. The input tax on such items used in show houses is recoverable in the normal way with output tax being due on their disposal.

It is possible that the unincorporated goods are used only for display purposes and are eventually scrapped. If this is the case, no output tax need be accounted for.