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This publication is available at https://www.gov.uk/government/publications/revenue-and-customs-brief-13-2015-reduced-rate-of-vat-for-the-installation-of-energy-saving-materials/revenue-and-customs-brief-13-2015-reduced-rate-of-vat-for-the-installation-of-energy-saving-materials
The purpose of this brief is to explain the government’s plans in respect of the decision of the European Court.
Who should read this?
This brief should be read by anyone who installs energy saving materials.
In 2012, the European Commission commenced infraction proceedings against the UK claiming that its application of the reduced rate for the installation of energy saving materials was not in accordance with EU law.
The European Court published its decision on 4 June 2015. The court agreed with the Commission that the UK had implemented the relief in a way that was not in accordance with EU law.
In essence, the court found that the UK had applied the reduced rate too widely. The reduced rate should be introduced as part of a social policy and should be targeted to those whom the policy is designed to help. A social policy cannot apply equally to everyone. In addition, the supplies must amount to a renovation or alteration of housing to be consistent with EU law potentially casting doubt on some of the installed goods currently subject to VAT relief.
The government is currently considering the implications of the decision.
If there are to be any legislative changes, they won’t be implemented before Finance Act 2016. Until then, supplies of the installation of energy savings materials will continue to be reduced rated and any changes will only apply to future supplies and not to supplies already made.
Who can I contact for further information?
For further information please contact the VAT Helpline on Telephone: 0300 200 3700.
The VAT Helpline is available Monday to Friday, 8am to 6pm.
If you have hearing difficulties, please dial the Textphone service on Telephone: 0300 200 3719.