VQOTW: Building Materials

My client is a builders’ merchant and has supplied steel sheets to a customer who is building his own home. The customer has provided my client with a copy of the planning consent supporting the demolition of an existing property and the construction of a new dwelling. Can my client zero-rate the supply of the steel?

VAT notice 708 section 11 sets out the VAT liability for those materials supplied without construction services, such as over the counter sales, and those materials incorporated by a contractor.

Where a builder is contracted to ‘supply and fit’ so is incorporating those materials into the new dwelling as part of the construction process, then as long as they are of a kind ordinarily incorporated into dwellings and are not excluded from the definition of building materials, the materials will follow the liability of the construction service.  In the case of a new dwelling this will be zero-rated, and with qualifying conversions and renovations will be reduced-rated. Section 13 of Notice 708 details what are ‘building materials’ and explains the exclusions. Goods which are incorporated into the building but which are not building materials are standard-rated.

However, goods supplied by a retailer or builders’ merchant are standard-rated as they do not supply them with construction services. There are exceptions for protective boots and helmets sold for industrial use, printed manuals and goods supplied in connection with certain building services supplied to disabled people, but in your client’s case where the materials are to be used in the construction of a new house, VAT must be charged at 20%.  If the customer is building a house for his own occupation, he may be able to recover the VAT he incurs on his building materials from HMRC using the DIY builders’ scheme. It will be helpful in this respect if your client issues him with a VAT invoice.

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VAT Advisor
0844 892 2470


Arti has worked in VAT since 2004 spending 11 years with HMRC. During her time in the department she was a visiting officer, a business records check officer providing educational visits and spent the last three years on the Alcohol Fraud team where she gained a good understanding of civil penalties and appeals. In addition she was an IT specialist providing support to colleagues and an associate trainer delivering VAT and Penalties training.

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