In United Carpets (Franchisor) Limited v HMRC [2025] TC09596, the First Tier Tribunal (FTT) found that flooring fitting services made by independent self-employed fitters were not part of a single supply of goods and services made by the appellant who supplied the flooring materials.
United Carpets (Franchisor) Limited (United) was a retailer of flooring and beds.
Customers who purchased flooring from United were given the option to have an independent, self-employed fitter lay the flooring. The fitter would go to the customer’s home to fit the flooring and would then be paid by the customer for that work, with the money being retained in full by the fitter.
- United did not treat the supply of flooring and the fitting as a Single supply, as it viewed the fitting to be separately supplied by independent fitters.
- HMRC viewed the supply of flooring and fitting to be a single supply made by United and assessed underdeclared output tax totalling £496,823.
- United Appealed the assessments to the First Tier Tribunal (FTT) on the basis that the supply of flooring and its fitting were separate supplies.
Section 4 VATA 1994 provides that:
- VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him.
- A taxable supply is a supply of goods or services made in the United Kingdom other than an exempt supply.
The FTT found that:
- The contract between United and the customer was one for the ‘sale of goods’, not fitting services.
- United’s role in the fitting of the flooring was ‘introductory’ in that it merely put a customer in contact with a fitter.
- United did not contract to pay the fitters for work; the obligation to pay was with the customer.
- The fitters’ contracts with customers were for flooring fitting services.
- Signage in the store explicitly stated that United did not provide fitting services.
- The economic and commercial reality of agreements between United and the fitters was not one of contractor and subcontractor.
- The economic and commercial reality was that the fitters were independent, and it was they who undertook fitting work for the customers.
- The supply of flooring and fitting was not a single composite supply because the flooring and fitting service were not supplied by the same person.
The appeal was allowed, and the assessments were set aside.
Useful guides on this topic
Mixed supplies: Single or Multiple supply?
Is a mixed supply a single or multiple supply for VAT purposes? What tests and case law apply?
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