Revenue and Customs Brief 7 (2019) - VAT on lost space of bathroom conversions for disabled people
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Published 26 August 2019
of this brief
There is a zero rate for works to install, extend or adapt a
bathroom, washroom or lavatory which are necessary because of a
person’s disability. This includes associated works to restore
space lost in the property as a result.
The purpose of this brief is to announce a reinstatement of guidance
on restoring lost space into Reliefs
from VAT for disabled and older people (VAT Notice 701/7). It also
explains what builders and their customers may need to do.
Builders undertaking such works, and both the recipients of the
works and their representatives.
The law zero rates the supply to a disabled person of works to
install, extend or adapt a bathroom, washroom or lavatory in the
person’s private residence, where this is necessary because of
their condition. This includes works that are necessary to restore the
space lost when installing, extending or adapting the bathroom,
washroom or lavatory.
For example, a disabled person needs to extend the size of an
existing bathroom to accommodate changes needed because of their
condition. In order to facilitate this, 25% of the adjoining room is
used to create the extended bathroom. The law zero rates the extension
works, including restoring the adjoining room to its original size
where it becomes necessary as a result of the extension.
Until 18 December 2014, HMRC’s published guidance provided an
explanation of this relief. However, from that date, the guidance no
longer made any reference to the zero rate for works to restore the
The lack of specific guidance has led to a degree of uncertainty
about the scope of the relief, and restoration of lost space. As a
consequence, HMRC has included specific guidance in Reliefs
from VAT for disabled and older people (VAT Notice 701/7).
4. Guidance update
HMRC has expanded the guidance to provide more detail on the VAT
treatment of such works.
From the date of this brief, Reliefs from VAT for disabled and older
people (VAT Notice 701/7) is updated to include the following
explanation of how the zero rate applies to such works:
(a) Where a bathroom, washroom or lavatory has been installed,
extended or adapted in a disabled person’s private residence,
because of their condition, the work may be zero-rated (this will refer
to paragraph 6.3 in Reliefs from VAT for disabled and older people (VAT
(b) If the works involved have reduced the size of another room within
that private residence there will be ‘lost space’.
(c) Where, as a result of the works, it becomes necessary to restore
the ‘lost space’, that work can be regarded as part of the
work essential to the provision of the bathroom, washroom or lavatory.
The restoration of that ‘lost space’, but only that
‘lost space’, by restoring the room itself to its original
size, can also be zero-rated. This can be done through internal works
or by extending outwards or upwards.
(d) The zero rate does not extend beyond the reinstatement of the
‘lost space’, so everything else, including converting
another room in the residence to replace the lost room, will be
(e) If the works go further than the ‘lost space’ amount,
that extra new space must be treated as standard-rated. An
apportionment of the zero and standard-rated parts must be made, and
further details can be found in VAT guide (VAT
(f) The ‘lost space’ amount that can be zero-rated must
follow the exact specifications in floor measurements, or room volume,
of the space lost.
(g) The application of the zero rate in these circumstances only
applies to the reinstatement of ‘lost space’ in terms of
building works. It does not extend to fixtures, fittings, units, and so
on. However, the zero rate does apply to the provision of utilities
that were available in the original converted room.
HMRC accepts that in order to restore the existing room to its
original size in terms of floor space or volume, it may be necessary to
extend the building.
HMRC also accepts that works to restore the lost space can include
connection to the utilities. However, HMRC does not accept that works
to restore the lost space go any wider so as to include, for example,
the construction of fixtures – such as cupboards and fitted
wardrobes, heating installation, installing new sinks – or the
installation of white goods and fittings.
5. Period from 18 December 2014
Builders and their customers who followed the less detailed guidance
in place until 18 December 2014 – and on the basis of it
zero-rated works to make good the space lost to the bathroom, washroom
or lavatory – need take no further action.
Where works were started prior to 18 December 2014, and progressed
after that date, builders and their customers may continue to rely upon
the guidance that was in place up to 18 December 2014.
In cases where works commenced after 18 December 2014, when guidance
made no reference to works to make good lost space, and builders and
their customers were unaware of the relief for such works, the zero
rate may be applied retrospectively, based on the new guidance, and
thus adjust the VAT charged on the works.
It is important to note, however, that such adjustments are subject
to the 4-year cap – which starts from the accounting period in
which the error was made.
For information on how to make adjustments see How
to correct VAT errors and make adjustments or claims (VAT Notice
Please be aware of the 4-year cap, and the rules of unjust enrichment.
From the date of this brief, Reliefs
from VAT for disabled and older people (VAT Notice 701/7), and the VAT
Relief for Disabled People Manual are amended to include the
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Article Published/Sorted/Amended on Scopulus 2019-08-26 22:00:00 in Tax Articles