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HMRC internal manual

VAT Construction

Building materials - Note 22 and Note 23: ‘ordinarily incorporated’ test: what ‘building of that description’ means

The term ‘building of that description’ is not defined. But it is interpreted as referring to the generic description of building being worked on.

This has been taken to mean those materials installed as fixtures in a particular type of building, which a purchaser would normally, or commonly, expect the builder to automatically include in the building. This is supported by the decision in Rialto Homes plc (VTD 16340), where the Tribunal stated:

The question whether the goods are of a description ordinarily incorporated in a building or its site is to be answered, having regard to the qualification that it is a ‘building of that description’… In our judgment one cannot just confine one’s attention to the particular development in question…

However, note that in Rainbow Pools London Ltd (VTD 20800), the Tribunal found that the supply of retractable insulated covers for an indoor swimming pool was a supply of ‘building materials’. They stated:

Our decision on this issue is that ‘any description of building’ means ‘any description of building’, including for instance ‘a luxury dwelling house’. There is, we accept, no purpose in reaching the conclusion that building materials might be ordinarily incorporated in a shop or an office because those descriptions of building will not fall within the types of general building for which construction services are zero-rated. If, however, one is addressing what is ordinarily incorporated in high-rise flats or luxury dwelling houses, it seems to us that those categories of buildings are ‘buildings of a description’ and they both fall within the overall category of ‘dwelling houses’.

Furthermore, the list of 37 items that HMRC give in their Public Notice referred to above only makes sense if one adopts this approach. Hoists, lifts and air conditioning are not ordinarily incorporated in dwelling houses in general, though they are ordinarily incorporated in high-rise flats, and air conditioning is also ordinarily incorporated in luxury dwelling houses. Saunas and swimming pools are ordinarily incorporated in luxury dwelling houses, rather than in dwelling houses in general. If Note (22) had meant to refer to what was ordinarily incorporated into the various generic categories of building referred to in the Items of Group 5, it could have said precisely that, rather than refer to ‘buildings of any description’.