Weekly VAT News

Tapi Carpets Limited: VAT and floor fitting services – FTT

Tapi Carpets Limited supplied floor coverings, including carpets. When customers purchased floor covering from Tapi, they could opt for a fitting arrangement service. If they did, Tapi would arrange for an independent fitter from its vetted pool to perform the fitting service, and the customer would pay the fitter directly. Tapi considered that, with respect to the fitting services, it was acting as the customer’s disclosed agent in arranging the fitting, and that the fitting service was supplied by the fitter, as principal, to the customer. Accordingly, Tapi accounted for VAT on the fees it charged for arranging the fitting service, but not on the fees charged by the fitters for the fitting service. HMRC considered that the fitters supplied the fitting services to Tapi, and in turn Tapi made an onward supply of the floor covering and the fitting services to customers, and issued assessments to Tapi on that basis. The First-tier Tribunal has agreed with Tapi. The FTT found that the contractual position was that Tapi agreed to arrange, on the customer’s behalf, for a fitter to attend the customer’s premises to fit the flooring, on the basis that the fitter was responsible for the provision of the service. The fitter provided the service to the customer under a contract concluded with the customer, and the economic and commercial reality reflected that contractual arrangement. In short, the FTT considered that the fitter supplied a fitting service to the customer, for which the customer paid the fitting fee, on which VAT would be due if the fitter was registered for VAT. The FTT allowed Tapi’s appeal. (Contact: Andrew Clarke)

Tax Update 2026 consultations

As previously reported in WVN, Tax Update 2026 included a number of consultations on indirect tax measures. As submissions on these are due in August/September, the following provides some further information on these measures. The consultation on extending online marketplace liability sets out a proposal to extend online marketplaces’ current liability for VAT on sales by overseas sellers to also cover sales by UK businesses when the goods are in the UK at point of sale. This would include the online food delivery sector. The proposed measure is intended to combat non-compliance with the current rules. The consultation seeks views on the measure’s design, and its potential administrative, commercial, and operational impacts. The consultation on the VAT treatment of land intended for social housing proposes a new zero rate on the sale of bare land for social housing development. The proposal would remove the need for social housing developers to comply with the ‘golden brick’ rules (whereby zero rating only applies once construction is above foundation level). The consultation seeks feedback on how the current VAT treatment affects the feasibility and timing of social housing developments, how a zero rate may influence behaviour, and the design of the proposed measure. Both of these consultations close on 18 August 2026. In the customs area, the call for evidence on customs modernisation, which closes on 15 September 2026, seeks views on the future of international trade and the impacts of digitalised and modernised trading practices on the UK customs regime. There is a focus on three issues, namely, the future of international trade and its impacts on commercial operations and the UK customs regime, the future of customs data and alignment between the UK customs model and digitalised business operations, and customs authorisations. A consultation on the introduction of mandatory registration for customs intermediaries, which closes on 21 September 2026, follows the introduction of a Standard for Customs Intermediaries, and proposes a mandatory registration for intermediaries submitting customs declarations on behalf of businesses. It seeks views on the scope of mandatory registration requirements, which intermediaries should be included, implementation, and enforcement. (Contact: Donna Huggard)