The recent First tier Tribunal decision United Carpets (Franchisor) Ltd v HMRC [2025] UKFTT 895 (TC) has sent a clear message to flooring retailers about tax and VAT risk when using self employed fitters.
Headlines from the Tribunal Ruling
HMRC challenged the industry standard model, arguing retailers should account for VAT on fitting fees even when fitters are independent. However, the Tribunal disagreed: If your paperwork, payment flows, and business process clearly show fitters operate as true independents, taking direct payment and responsibility, you are not liable for VAT on those services.
BUT: This relief depends entirely on how you structure contracts, invoices, and day to day practice.
Why This Matters for Your Business
Most flooring retailers think they are "safe" because they only introduce independent fitters. Yet HMRC's approach in the United Carpets case proves the dangers of complacency regarding third party installer compliance.
Key Requirements
- Customer must pay fitters directly, not through the retailer
- Fitters must be responsible for their own workmanship and insurance
- Your marketing, documentation, and contracts must state the separation clearly
- Retailers must not control how fitters work, quote, or guarantee fitting
How MC Growth Consultancy Can Help
Rather than wonder if you are truly following the safest route regarding subcontractor tax compliance, get MC Growth Consultancy's flooring sector experts to conduct a comprehensive contractor compliance audit of your business.
Contact MC Growth Consultancy today to schedule your business review and turn your legal peace of mind into growth and competitive advantage.
References
Book: Employment Status and Taxation Law by Sally Jones
Online: UK Government HMRC tribunal rulings and compliance updates at the HMRC website
Case Law: United Carpets (Franchisor) Ltd v HMRC [2025] UKFTT 895 (TC)