Valoración de la Prueba

Another subject that causes a lot of confusion is whether trees, plants, soil, turf and other goods used in landscaping are "building materials". The rules for new construction are different to those for conversions and renovations.

New construction

Under the rules, the zero-rate or DIY claim can only apply to the extent that the services and goods used in the course of those services that are "closely connected" to the construction of the building itself. It's a bit different to other "building materials" because a garden isn't actually a physical part of the building in the same was as say a boiler or electrical wiring.

133 HMRC accept that some landscaping is "closely connected" to the new construction, which means that certain garden materials and plants qualify as "building materials".

This normally means that the contractor can usually only zero-rate part of the cost of the supply and installation of the goods and DIY developers can only claim VAT on limited goods. As with any other "mixed" supply, if the contractor doesn't identify goods and services that are zero-rated, then the whole of the supply is liable to the standard rate and DIY claimants will not be able to claim any of the VAT.

However, in addition to the usual factors, there's also an additional rule that relates specifically to trees, plants and shrubs detailed on landscaping schemes as explained below.

Guidance in VAT Notice 708 http://tinyurl.com/n6gttof

Paragraph 13.8.2 confirms that building materials includes the following:

"turf, topsoil, grass seed, plants and trees (but please note that trees, shrubs and plants are only ‘building materials in particular circumstances - see para 3.3.4)"

Paragraph 3.3.4 says:

Please note that the planting of shrubs, trees and flowers would not normally be seen as being ‘closely connected…’ except to the extent that it is detailed on a landscaping scheme approved by a planning authority under the terms of a planning consent condition. This does not include the replacement of trees and shrubs that die, or become damaged or diseased.

In other words:

 the planting of topsoil, turf and plants "closely connected" to the dwelling is zero-rated and the goods concerned are "building materials";

 any work done outside the "closely connected" areas is standard rated and the goods are not

"building materials";

 in either situation, the planting of trees, plants and shrubs is only regarded as "closely

connected" if is detailed on a landscaping scheme approved by a planning authority under the terms of a planning consent condition.

Example

This all sounds complicated, but here's an example of a typical scenario and how I think the rules apply in practical terms.

Suppose there is a new house under construction with a 100 foot garden, much of which includes lawn, trees and various plants. In this case, the trees, plants and shrubs are detailed on the landscaping scheme that has been approved by the local planning authority under the terms of a planning consent condition.

134 HMRC would normally agree that a proportion of the services of creating the garden and the goods are "closely connected" where the garden immediately surrounds the house. But what proportion? In this case, there's a footpath situated about 10 feet around the outside of the house which enables people to access the property. Between the footpath and the house, there is a strip of grass and some flower beds.

The supply and installation of the topsoil, grass, plants and trees would be as follows:

 the installation of topsoil, planting grass seed or turf between the path and the house would probably be regarded as "building materials" and therefore zero-rated:

 anything outside that area is not "building materials", so the goods and the services are both standard rated.

This is a messy subject and also a bit subjective - your interpretation of "closely connected" may be different to HMRC's interpretation. To avoid hassle and also to keep your VAT costs down, I'd suggest that you need to agree in advance with the contractor/landscaper about the proportion of the goods/plants etc that are liable to VAT and what proportion of the services are liable to VAT. Ensure that the zero-rated goods and services are separately identified on the invoices.

Renovations and conversions

Unfortunately, the reduced rate and DIY VAT claims for work done on gardens in the course of renovations or conversions are less generous than the reliefs for new homes. For example, the reduced rate doesn't extend to any landscaping services - see Notice 708; paragraphs 7.6 and 8.6 - because it isn't done to the fabric of the property or the essential services to the outside of the property.

However topsoil, grass seed, turf, plants and trees planted close to the property qualify as "building materials" subject to the same restriction planning restriction as those planted in the course of construction of new homes. This means that the reduced rate may apply in some limited situations, similar to those for the zero-rate relief for new homes.

Unfortunately, HMRC don't provide any additional guidance about the extent of the reduced rate for plants, turf, shrubs etc in conversions and renovations. However, these items are on the list of "building materials" so my initial view is that HMRC may accept that, subject to the planning condition, the reduced rate could apply to other plants, trees, turf etc that are planted in the "immediate site" of the property. But this is one area where I may need to revise my opinion at some point.

Again, I'd recommend that you discuss the VAT liability of any such goods and services with your contractor/landscaper to see if the reduced rate might apply.

135 VAT implications

What rate of VAT should the contractor charge?

 New construction : the supply and installation of turf, topsoil, grass seed, plants and trees can normally be zero-rated if "closely connected" to the construction of the property. However the supply and installation of the planting of trees, shrubs and flowers are only zero-rated if detailed on a landscaping scheme approved a planning authority under the terms of a planning consent condition.

 Qualifying conversions and renovations: The supply of turf, topsoil, grass seed, plants and trees may qualify for the reduced rate, subject to the same planning restriction as new construction above and my own reservations mentioned above. Any other plants, trees etc and any landscaping services are standard rated.

Can I claim this VAT under the DIY refund scheme?

 DIY house-builders can only claim VAT on plants and trees if they qualify as "building materials" under the guidance given above. VAT cannot be claimed on any gardening/landscaping services.  DIY home converters may be able to claim VAT on certain plants and trees if they qualify as

"building materials" under the guidance given above. However, VAT cannot be claimed on any related gardening/landscaping services.

136 Section 2: Services and other issues

I've discussed below some other common problem areas not related to building materials, including how the rules apply to detached garages, as well as scaffolding and plant hire.