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HMRC internal manual

VAT Relief for Disabled People Manual

HM Revenue & Customs
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Adapting and installing goods

The law
Adaptations to goods [Items 3 and 4]
Adaptations to buildings [Items 3 and 4]
The apportionment provision [Note (8)]

The law

Zero-rating is available for a number of services which constitute adaptation, repair and maintenance, or installation. The text of the relevant items (VAT Act 1994, Schedule 8, Group 12) reads as follows:

  1. The supply to a handicapped person of services of adapting goods to suit his condition.

  2. The supply to a charity of services of adapting goods to suit the condition of a handicapped person to whom the goods are to be made available, by sale or otherwise, by the charity.

  3. The supply of goods in connection with a supply described in item 3, 4 or 5.

There is also an associated legal note, which reads;

8) Where in item 3 or 4 the goods are adapted in accordance with that item prior to their supply to the handicapped person or the charity, an apportionment shall be made to determine the supply of services which falls within item 3 or 4.

Adaptations to goods [Items 3 and 4]

The clear purpose of items 3 and 4 is to relieve from VAT the costs involved in adapting standard-rated goods to meet the needs of disabled people. A business can therefore zero rate adaptation services provided:

  • the adaptation is clearly of a kind to suit the condition of the disabled person;
  • the supply is made to a disabled person or an eligible charity; and
  • it receives an eligibility declaration as set out in ‘Notice 701/7 VAT reliefs for disabled people’.

For example, a disabled person with limited mobility may have a remote controlled opening and closing device fitted to a front door to enable the door to be opened and closed. This means that the door is adapted to suit the disabled person’s condition.

Adaptations to buildings [Items 3 and 4]

Buildings are not goods although the first grant of a major interest is deemed to be a supply of goods by virtue of, the VAT Act 1994, Schedule 4, paragraph 4, - see VCONST. This means that the alteration or adaptation of a building to suit the condition of a disabled person is not a supply of adapting goods so items 3 and 4 of Group 12 of Schedule 8 do not apply. This approach has been supported by the Tribunal in the case of Arthritis Care (13974). The only reliefs which apply to adaptations of buildings are those set out in items 8 to 12 (see VRDP11050) and items 16 to 17 (see VRDP24000 - ‘Introduction and law’) of Group 12, Schedule 8.

The apportionment provision [Note (8)]

Note (8) permits the supply of goods adapted prior to sale to be apportioned between the standard-rated goods and the eligible zero-rated adaptations (see VRDP43000 - ‘The law’).

Audio described videos

An example of where this provision is used is the ‘Audio Described Videos’ produced by the Royal National Institute for the Blind. These videos allow a blind person to enjoy a video which other family members may be watching, by adding an audio commentary which describes the action taking place on the screen. The product remains essentially a video, and so cannot be said to be ‘designed solely for use by a disabled person’. However, these standard-rated videos have been adapted to facilitate their use by people with a disability, and so the law provides for an apportionment to be made so that the value of the adaptation can be zero-rated.