In August of this year, HMRC issued changes to VAT Notice 701/7 to clarify policy on the zero-rating relief available for supplies to disabled people in their private residence. In particular, the scope of relief available in relation to ‘lost space’ when a new, extended or adapted bathroom occupies space previously within an adjoining room, and construction services are supplied to restore this lost space.

When the notice was last updated in December 2014, guidance on this issue, which was previously known as ‘restitution relief’ was omitted, increasing the uncertainty around a complex set of conditions that apply to this relief so that some builders may have inadvertently overcharged customers as a result.

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