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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]: goods supplied in connection with building alterations [item 13]

There has never been any provision in the law to relieve supplies to disabled people or eligible charities serving their needs of VAT on purchases of all building or construction materials. The reliefs provided by items 8 to 12 is essentially for building services and our view is that item 13 is meant to zero-rate only those goods supplied by the supplier of the services for use in carrying out those services. This would mean that if someone supplies the building services to a disabled person other than the supplier of goods the goods couldn’t be zero-rated.

Gary Flather (11960)

The appellant was an unregistered disabled person. He appealed against a decision of the Commissioners to refuse zero-rating on building materials supplied to him by a builders’ merchant. The materials were used in the construction of ramps, passages and so on, designed to facilitate Mr. Flather’s access to and movement within his home. These construction services were provided by two unregistered builder/carpenters. The Tribunal held that the goods could qualify for zero-rating and concluded:

“We see no ambiguity about the application of the words used in Item 11 to the present circumstances. The facts show that the building materials were supplied by MMB (the builder’s merchant) at the same time the Millers (the building contractor)were supplying their building services; the materials were bought exclusively and wholly for the purpose of the Millers’ supplies of services of constructing ramps, facilitating entry and movement within Mr Flather’s home and installing a WC. Those materials were actually used in the construction works There could hardly have been a closer connection between MMB’s supply of goods and the Millers’ supply of construction services. Putting it the reverse way round, it would be manifestly untrue to say that the goods were not being supplied in connection with the supply of construction services described in Item 8 and 10.”

Since the Tribunal case of Gary Flather (11960) suppliers can zero rate goods supplied to a disabled person or an eligible charity serving their needs in connection with qualifying construction services. The supply of goods must be to a disabled person or charity, not the supplier of the zero-rated services. The provider of the services must be making a business supply but does not have to be VAT registered. See ‘Notice 701/7 Reliefs for disabled people’.

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How do I deal with requests for zero-rating of materials?

You will have to advise that a builders merchant or similar can zero-rate a supply if he is happy that the building work qualifies for zero-rating and can demonstrate that subsequently to visiting officers. However, there is an important exception where the goods are bought:

  • in connection with works performed by a friend or relative for free, or
  • in a DIY capacity.

There is no consideration for the service and so the goods are ineligible for the relief, because there is no supply of zero-rated services for them to be ‘connected’ to - see ‘Notice 701/7 Reliefs’ for disabled people.