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HMRC internal manual

VAT Relief for Disabled People Manual

HM Revenue & Customs
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Building alterations [items 8 to 13]: are the building alterations supplied to a disabled person?

There are five particular circumstances in which the question of who has received the supply often arises.

Dependants and minors

Where building adaptations are supplied to a child, or a disabled dependent relative living with the householder, the supplies would technically be to the householder and not the disabled person. However, in these circumstances zero-rating would normally be permitted.

A disabled person dies before they can take up residence

Sometimes work which qualifies for zero-rating is commissioned by a relative of the disabled person before that person moves into the residence. The disabled person may then die before being able to move in. It is not our policy to require output tax to be paid by the builder provided you are sure that:

  • the work in question qualified for relief; and
  • the person for whom the alterations were being undertaken was disabled (and not, for example, merely elderly).

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Landlord or tenant?

Zero-rating can be allowed if you are satisfied that the supply is to the disabled person, not to his landlord or local authority. The key factor in deciding to whom the supply is made is ‘for whom the contract is commissioned’:

  • Where the local authority takes over a grant assigned to an individual and carries out the work, perhaps because the person concerned is not able to do so, the supply remains to the disabled person and thus is eligible for zero-rating.
  • Where the local authority commissions and pays for the supply, with the disabled person being merely the passive recipient, then the supply will be seen for VAT purposes as being to the local authority and relief will not apply.
  • Tenants cannot normally authorise substantial alterations to be made to buildings which they rent. You will generally find, in practice, that any such services will be supplied to the landlord of the property, regardless of who pays for them.

See VATSC for guidance about direction of supply.

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Grants made by local authorities

Disabled people may qualify for disabled facilities grants towards the cost of providing adaptations and facilities in their private residence to enable them to continue living there. Such grants are given by local councils under Part I of the Housing Grants, Construction and Regeneration Act 1996. The council may pay the grant:

  • direct to the disabled person; or
  • direct to the contractor.

If the grant is paid to the contractor you should check the contractor’s records to ensure that:

  • the invoice clearly stated that the work was done for the disabled person; and
  • VAT was not charged on zero-rated work.

Landlord is a charity

There may be circumstances where building work undertaken for a disabled person’s benefit is grant-funded but the local authority pays the grant directly to the contractor who supplies his services to a landlord which is a charity. This work will be zero-rated if the building work being done for the disabled person’s charity landlord consists of:

  • providing, extending or adapting a bathroom, washroom or lavatory in certain residential accommodation -see VRDP11050 - where the work helps the disabled person to use those facilities; or
  • constructing a ramp or widening a doorway or passage to enable a disabled person to enter or move within any building - see VRDP11500.

If the building work does not qualify for relief under either of the above criteria you should not assume that the work is not zero-rated - see VCONST.