Supply of self-employed bathroom fitters’ services

The taxpayer installed bathrooms and has been trading since the 1970s. In its promotional literature it claimed to offer a ‘complete service from initial discussion … to the work being completed’. It employed an in-house fitting team and also used independent contractors to do some of the work. The decision as to which fitters to use was made by the directors only after an order was received from a customer; this was a significant issue in the appeal.

When an invoice was raised at the completion of the job the customer was asked to make direct payments to any contractors who had provided their services. The invoice did not itemise any VAT quoting only the VAT-inclusive figure. The taxpayer accounted for output tax on the payments it received from customers and excluded any of the payments made directly from the customer to the contractor. The contractors were...