§ Sir Hugh Rossiasked the Chancellor of the Exchequer why, when a new washing machine is installed in a house, the plumbing work and fittings are subject to the standard rate of value added tax if an internal connection is made to a waste pipe and zero rated if a hole is made in a wall for an external connection; if he is satisfied that the distinction is necessary; and how his officials check that builders have correctly rated work for value added tax purposes.
§ Mr. HayhoeVAT law zero rates services supplied in the course of the alteration of a building. Work which does not amount to an alteration is standard rated. The practical application of the law to the great variety of types of work that can be done to a building necessarily involves the making of some very fine distinctions, such as that referred to in the question, between work which alters the fabric of a building and work which does not. Checking that builders have applied the correct VAT liability to their work is one aspect of the work performed by officials carrying out VAT control visits. The checking would be selective and would involve examination of specifications, estimates, drawings and so on.