TC09596 - [2025] UKFTT 00895 (TC)

This appeal concerns the VAT treatment of a series of transactions. The Appellant (United Carpets (Franchisor) Limited) appeals against VAT assessments (“the Assessments”), raised to best judgment (pursuant to s 73(1) of the Value Added Tax Act 1994 (“VATA”)), as follows:

The Appellant is a retailer of flooring (including carpets, underlay, vinyl and wood flooring), as well as beds. A customer who purchases flooring from the Appellant is given the option to have an independent, self-employed, fitter to carry out the fitting of the flooring that the customer has purchased. If the customer so chooses, the fitter will attend the customer’s home to fit the flooring, as directed by the customer. The fitter is then paid by the customer for that work, with the money being received and retained, in full, by the fitter.

HMRC determined that the Appellant had incorrectly treated the supply of carpet fitting and contend that the Appellant supplied fitting services via subcontractors who have assessed the Appellant for output tax on the fitting fees. HMRC further contend that the Appellant makes those supplies as part of a single supply,comprising both the flooring and the fitting services. The Assessments were raised to recover under-declared output tax.

The Appellant’s position is that the self-employed fitters are completely independent, and that the fitting services do not form a single supply. The Appellant further contends that HMRC had stated that they had decided to take no further action to disturb the status quo as regards the VAT treatment adopted by the Appellant, but that they would review the sector more broadly and, if appropriate, issue clarificatory guidance in the future. HMRC disagree. HMRC’s position is that there had merely been a pause in the enquiry.