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Tribunal Rules Retailers Not Liable for VAT on External Flooring Fitting
A VAT tribunal has ruled that retailers selling flooring are not responsible for VAT on installation work carried out by independent fitters, in a decision that could have wide-reaching implications across the industry.
HMRC had argued that supplying and fitting flooring amounted to a single taxable transaction, meaning VAT should be charged on both elements. The case centred on Thompsons Carpets in Mansfield, a United Carpets franchisee, against whom HMRC had originally raised a £375,000 assessment.
Although HMRC later withdrew that claim in May 2021, the authority continued to pursue the wider issue. By late 2021, further assessments totalling almost £497,000 were issued, covering the period February 2018 to November 2021.
The First Tier Tribunal, presided over by Judge Natsai Manyarara and Justice of the Peace John Agboola, heard the case earlier this year. In its detailed judgment, the panel sided with United Carpets, making several key findings:
- The agreement between United and its customers was for the purchase of flooring only, not fitting services.
- United’s involvement in fitting was limited to introducing customers to independent fitters.
- Fitters contracted directly with customers and were paid by them, not by United.
- In-store signage made clear that United did not provide fitting services.
- The commercial reality was that fitters were independent operators, not subcontractors of United.
- Flooring supply and fitting could not be treated as a single supply, since they were provided by different parties.
As a result, the tribunal concluded that VAT on fitting services is not the responsibility of retailers in such arrangements.
HMRC has until 22 September to decide whether to appeal. A spokesperson said the department is “carefully considering our next steps.”
The full ruling is available via the National Archives: FTT decision
03-09-2025Visit our main News page