[BUG] VS Code extension creates files with restrictive NTFS permissions on Windows — current user lacks full control

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

What's Wrong?

When Claude Code (VS Code extension) creates files on Windows, the files do not inherit NTFS permissions from the parent directory. The current Windows user is not granted Full Control. Only default system groups are set (Administrators, SYSTEM, Authenticated Users, Users).

This breaks third-party backup/sync tools that run under the current user context, as they get "Access denied" errors.

Expected Behavior

Created files should inherit NTFS permissions from the parent folder, so the current user retains the same access level (e.g. Full Control) they have on the parent directory.

Evidence

Parent folder (correct — user has Full Control):
USERNAME:(OI)(CI)(F)

File created by Claude Code (broken — user missing):
BUILTIN\Administrators:(I)(F)
NT AUTHORITY\SYSTEM:(I)(F)
NT AUTHORITY\Authenticated Users:(I)(M)
BUILTIN\Users:(I)(RX)

Workaround

Attempted fix with takeown + icacls /reset, but even after taking ownership, hundreds of files still return "Access denied" when trying to reset permissions. No reliable workaround found so far.

Environment

• OS: Windows 10
• VS Code: 1.114.0
• Claude Code Extension: 2.1.97
• File system: NTFS
• Drive: secondary partition

What Should Happen?

Created files should inherit NTFS permissions from the parent folder,
so the current user retains the same access level (e.g. Full Control)
they have on the parent directory.

Error Messages/Logs

Steps to Reproduce

1. Open a project folder where your user has Full Control
2. Let Claude Code create any file (CSS, JS, PHP, etc.)
3. Run: icacls "path\to\created\file"
4. Observe: current user account is NOT listed in permissions

Claude Model

Not sure / Multiple models

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.1.97

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_