The UK First-tier Tribunal has ruled that Tapi Carpets Ltd. was not required to account for £13.5 million ($18.1 million) in VAT on floor-fitting services carried out by independent fitters. The decision, dated 5 August, concerned the contractual and commercial relationship between the retailer, its customers, and self-employed fitters.
Customers purchasing flooring from Tapi could pay the retailer a separate fee to arrange an independent fitter, on which Tapi charged VAT. The actual fitting charge, however, was paid directly by the customer to the fitter on the installation date. Most of the fitters operated as sole traders and were not VAT-registered.
HM Revenue & Customs (HMRC) assessed Tapi for VAT covering June 2019 to December 2023, taking the position that the fitters supplied their services to Tapi under a subcontracting arrangement and that Tapi subsequently supplied those services to customers. On that basis, HMRC considered the fitting fees subject to the 20% VAT rate.
HMRC relied on factors including Tapi’s role in setting fitting prices, selecting fitters, and handling customer complaints. Tapi maintained that it acted as the customer’s disclosed agent when arranging the fitting and was neither contractually responsible for providing the installation nor a party to the transaction between the customer and fitter.
The tribunal found in Tapi’s favour. It concluded that the contractual arrangements were consistent with their economic and commercial reality. The independent fitters performed the work, were responsible for the fitting service, received payment directly from customers, and entered into a contract with the customer on the installation date.
As a result, Tapi was not treated as making the supply of fitting services and was not liable for the VAT assessed by HMRC.The UK First-tier Tribunal has ruled that Tapi Carpets Ltd. was not required to account for £13.5 million ($18.1 million) in VAT on floor-fitting services carried out by independent fitters. The decision, dated 5 August, concerned the contractual and commercial relationship between the retailer, its customers, and self-employed fitters.
Customers purchasing flooring from Tapi could pay the retailer a separate fee to arrange an independent fitter, on which Tapi charged VAT. The actual fitting charge, however, was paid directly by the customer to the fitter on the installation date. Most of the fitters operated as sole traders and were not VAT-registered.
HM Revenue & Customs (HMRC) assessed Tapi for VAT covering June 2019 to December 2023, taking the position that the fitters supplied their services to Tapi under a subcontracting arrangement and that Tapi subsequently supplied those services to customers. On that basis, HMRC considered the fitting fees subject to the 20% VAT rate.
HMRC relied on factors including Tapi’s role in setting fitting prices, selecting fitters, and handling customer complaints. Tapi maintained that it acted as the customer’s disclosed agent when arranging the fitting and was neither contractually responsible for providing the installation nor a party to the transaction between the customer and fitter.
The tribunal found in Tapi’s favour. It concluded that the contractual arrangements were consistent with their economic and commercial reality. The independent fitters performed the work, were responsible for the fitting service, received payment directly from customers, and entered into a contract with the customer on the installation date.
As a result, Tapi was not treated as making the supply of fitting services and was not liable for the VAT assessed by HMRC.
Source: gov.uk
Published on August 11, 2026