Supply and Installation of Window Blinds

VAT Question

My client supplies blinds for windows and back in 2021, supplied and installed some blinds to houses at a new housing development before the houses were complete.

As he had done for the many years he had been trading and as guided by HMRC’s VAT Notice 708, he charged the developer VAT at the standard rate, and the developer paid this to my client without question.

The developer has now come back to my client requesting reimbursement of the VAT my client charged, advising my client that they should not have charged VAT as their supply and installation should have been zero-rated.

Is the developer correct?

VAT Answer

A: Back in 2011, HMRC issued a Business Brief to confirm that roller blinds and other ‘window furniture’ were not ‘building materials’ for the purpose of the zero-rating provided when installed in new houses under construction. This was reflected in HMRC’s guidance in their VAT Notice 708 on Building and Construction.

However, following the Tribunal decision in the case of Wickford Development Co Ltd, HMRC changed their policy and accepted that manually operated blinds were building materials, so their supply and installation during the construction of new dwellings were zero-rated.

However, electric blinds were not included in this policy change, so they were not building materials and remained standard-rated.

This change of policy was notified in a new Revenue & Customs Brief 5 (2021), which also confirmed that HMRC backdated the effective date of this change of policy to October 5th 2020.

Unfortunately, HMRC took some considerable time to update their VAT Notice 708, and so many businesses that supply and install blinds and rely on the guidance in VAT Notice 708 were unaware of the change and continued to charge VAT in the way they always had done.

Therefore, given that your client’s supply was made in 2021, the developer is correct in that the supply to them should have been zero-rated, so your client can rightfully reimburse the incorrect VAT charged to them and recover this incorrectly declared VAT from HMRC.