Goods ordinarily incorporated into new dwellings

Taylor Wimpey Plc

The UT has released an interim decision in this case concerning the UK’s input tax block on certain items incorporated into buildings. This is a long decision and complex case. The Fleming claim submitted by Taylor Wimpey (TW) was for VAT on low spec white goods, such as extractor hoods and ovens, high spec white goods, (fridges, washing machines etc.) and carpets.

Essentially, the taxpayer is looking to achieve VAT recovery on the items on the basis that the block does not apply to the items or that the block was unlawful under EU law. The UT, reaching a different conclusion to the earlier FTTs, has decided that the block and the changes to it post 1978 are lawful under EU law. It has also given guidance as to which items are incorporated in the dwelling. This has been left for the parties to decide.

Once agreement has been reached on the non-incorporated goods to which the block does not apply, the UT must then decide if output tax is due on these items because there is a separate supply of them. If this is the case the UT will then have to consider if the output tax must be set off against the claim reducing it to nil, even though HMRC is out of time to assess


The case is of importance for Taylor Wimpey and other housebuilders given the size of the claim. Taylor Wimpey’s claim for example is over £51m.

Rental and optional insurance – mixed supplies

Wheels Private Hire Ltd

The taxpayer operates a taxi business. For drivers who do not have their own cars, they hire out vehicles and radios to drivers for £120 per week on which they charge VAT. All vehicles are required to be insured by law in order to be driven on the roads. Drivers can arrange their own insurance or can choose to buy the insurance from the taxpayer for £45. The taxpayer has a fleet contract with a third party insurance company.

The UT noted its surprise that the BGZ Leasing (C-224/11) (BGZ) ECJ judgment was not raised at the FTT. The UT noted the similarities between BGZ and this case, which concerns leased cars and the recharging of insurance. The UT decision looks at the ECJ judgment in detail, pointing out one error in the English version and explaining what key paragraphs of the judgment mean.

Scope of the insurance exemption – HMRC considered that the FTT had erred in concluding that the supplies were exempt under the expanded definition in CPP.

Single versus multiple supply – The UT goes through the key European case law and reproduces the 12 principles originally in the UT’s decision in The Honourable Society of Middle Temple. The UT’s starting point was taken from the ECJ’s statement in BGZ that, as a general rule, a leasing service and the supply of insurance for a leased item, cannot be regarded as being so closely linked that they form a single transaction even though the insurance is for the leased item. The UT considered the optional nature and separate charge for the insurance provided by Wheels were significant indicators of a separate supply, but not decisive. Taking all the factors into account however, the UT concluded there was a separate VAT exempt supply of insurance.


This case quite rightly refers heavily to BGZ and provides some useful insights into this ECJ judgment. This appears to be an unusual case for HMRC to pursue, although this may have been influenced by the fact that the most drivers take up the insurance and that the taxpayer makes a profit on the insurance. HMRC raised a number of arguments to limit the exemption but all of these have been rejected. On the single versus multiple supply point this was probably the more straightforward issue and the case is supportive of the fact that genuine contractual freedom to obtain a supply for a separate charge is strongly supportive of a separate supply.

VAT and the option to tax – Training seminar

2008 brought major changes to the rules in connection with VAT on commercial property with the introduction of a Schedule 10 VAT Act 1994.

Some changes were simple like the 'official' change from 'waiving the exemption' to 'opting to tax'. Some other changes were very technical, and the use of some forms is now compulsory. The Schedule has already been amended by statutory instruments which came in to force in April 2010 and amends grants made to social landlords.

VAT is a complex tax and mistakes can be very costly to remedy. Should you opt to tax? How can the option to tax be disapplied? What about a REE?

From 1 August 2009 it became possible to revoke the election, where the election was made 20 years previously. In the current commercial property market, anything that makes an empty property more attractive to some prospective tenants will be of interest to landlords. Can you advise them?

This seminar will explain the current rules on VAT on commercial property, and in particular how it affects property transactions.

What You Will Learn

*             Schedule 10 VAT Act 1994 - Option to tax

*             Statutory instruments which came into force in April 2010

*             Cooling off period and revocations

*             Forms

*             Single option for land and property

*             Renting out new homes

*             Revoking the election after 20 years

*             TOGC rules


Date                                      Tuesday 9 May 2017

Venue                                  RAC Club, Pall Mall, London

Time                                      13h00-16h00

Cost per person                £200 plus VAT

!! 10% discount applies to all bookings before 20 April !!

To register your interest, please email This email address is being protected from spambots. You need JavaScript enabled to view it. or call Phillip on 07793 707 839.

4 Eyes Ltd can also offer bespoke VAT training at your premises covering all areas of VAT. Group training at your premises provides a cost effective and targeted training solution for your staff. Please email if you would like to find out more.