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Last edited 12 Oct 2020
Products v goods v materials
The terms ‘products’, ‘goods’ and ‘materials’ are sometimes used as if they are interchangeable, however, there are differences between them determined by what they are made of, how they are finished and whether they are offered for sale. Unfortunately these differences are sometimes rather vague and are not consistently applied.
- Materials are raw, unprocessed substances such as sand, salt, and so on.
- Products are processed, finished items that are offered for sale. That is, they are manufactured combinations of materials and perhaps other products, processed to create items such as doors, windows, light fittings, and so on.
However, this deceptively clear difference becomes more complex when applied to composite materials (such as adhesives), to finished materials (such as processed timber), to unfinished products, and so on. For example, steel, whilst it has been processed, might be considered to be a material, whilst a steel beam, which is the same material but in a different form might be considered to be a product.
A slightly broader definition of materials as 'physical substances that things can be made from' excludes items such as doors and windows, but includes items such as processed timber, adhesives, concrete, and so on.
However, the distinction is confused further by unhelpful definitions such as that in Approved Document 7: materials and workmanship, which defines materials as; ‘manufactured products such as components, fittings, items of equipment and systems; naturally occurring materials such as stone, timber and thatch; and backfilling for excavations in connection with building work.’ This would appear to include all the tangible items used in construction works.
All of these can be distinguished from the supply of ‘services’ which HMRC suggest is ‘something other than supplying goods’, and typically refers to activities such as consultation, maintenance, installation, or sometimes the provision of accommodation.
NB: The Construction Products Regulation defines a ‘construction product’ as; ‘…any product or kit which is produced and placed on the market for incorporation in a permanent manner in construction works or parts thereof and the performance of which has an effect on the performance of the construction works with respect to the basic requirements for construction works.’
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