Deeks VAT News Issue 4

Deeks VAT News

Keeping you up to date on VAT changes

Issue 4                                                                                                                     

16 July 2019

Welcome to the latest edition of Deeks VAT News.

In this week’s issue we look at the following areas:

• Stuart Farquharson [2019] UKFTT 0425 (TC) – DIY Builders Claim
• Yeshivas Lubavitch Manchester [2019] UKFTT 0427 (TC)
• Changes to the reduced rate for energy-saving materials (2019)

Stuart Farquharson [2019] UKFTT 0425 (TC) – DIY Builders Claim

Mr Farquharson submitted a DIY builder’s claim on 7 August 2017, further, to obtaining a certificate of completion dated 26 May 2017. HM Revenue & Customs (“HMRC”) rejected the claim on the basis that it was time-barred, as in December 2008, the Farquharsons were given a month’s notice to move out of the cottage as the owner wanted to sell. Instead of looking for a new place to rent, the decision was taken to convert the garage in the submitted plan into a habitable flat, since the main house was still very far from being habitable

The court held that it is settled law that guidance notes represent the interpretation of HMRC of the relevant statute and have no force in law. The Tribunal’s duty is to interpret the statutes and apply to the facts in question to determine the appeal. For this reason, the Tribunal made no reliance on the guidance notes or HMRC’s internal manual VATCONST02530 in reaching their decision.

The real issue in this appeal is therefore, to determine the meaning of ‘completion’ as provided under reg 201 of the 1995 Regulations. Applying the ordinary rules of statutory construction, the plain meaning of ‘completion’ under reg 201(a) is to be defined by the issue of a certificate of completion under reg 201(b)(i).

It is only in the absence of a certificate of completion that the Commissioners would entertain a claim based on the alternative documentation. The Tribunal held that HMRC were incorrect to argue that completion took place from either the date of first occupation or the last date any purchases of goods were made.

Therefore, the appellant’s VAT refund claim of 7 August 2017 was made within the three-month time limit of completion of the dwelling for the purposes of reg 201 of the 1995 Regulations. The appeal is accordingly allowed.

Yeshivas Lubavitch Manchester [2019] UKFTT 0427 (TC) – “extension” or an “annexe”?

In the present case, the Appellant a charity purchased a building to use as a schoolhouse. It understood that the refurbishment costs of the main building were subject to VAT at the standard rate of VAT. However, it argued that the annexe” to the existing building was subject to VAT at the zero rated in accordance with Items 2 and 4 in Group 5 of Schedule 8 VATA.

HMRC argued the as the works were carried out at the same time there was a single supply of standard rated construction services.

The Tribunal held that construction of an annexe does not cease to be the construction of an annexe, merely because other works are also undertaken by the Appellant at the same time, or even as part of the same contract.

The Tribunal held that this was a construction of the annexe and it was zero rated in accordance with Items 2 and 4 in Group 5 of Schedule 8 VATA.

Changes to the reduced rate for energy-saving materials (2019)

On 10 July 2019, HMRC published the VAT: changes to the reduced rate for energy-saving materials (2019) policy paper. HMRC says this about the policy paper:

“This measure amends the scope of the reduced rate as set out below.

• The withdrawal of the reduced rate for the installation of wind turbines and water turbines.
• Limiting the reduced rate to the labour cost element of a supply of installation where the value of the materials exceeds 60% of the total cost charged to the customer. However, this restriction will not apply where the customer satisfies certain conditions (is aged 60 or over or is in receipt of certain benefits), the supply is to a relevant housing association or the building in which the ESMs are installed is used solely for a relevant residential purpose.

In all other respects, the relief is retained in full.

Please note that Deeks VAT News is not intended to be a comprehensive guide to every development in VAT. It should not be used as a substitute for specific advice in individual circumstances. Deeks VAT Consultancy Limited cannot accept any liability for any action/inaction as a result of any reliance on Deeks VAT News’s contents.

Deeks VAT Consultancy Limited

Managing Director: Jane Deeks LLB (Hons) LPC CTA

T: 07710 553831        E: jane@deeksvat.co.uk         W: deeksvat.co.uk