In A N Checker Heating & Service Engineers v HMRC [2018] UKUT 292, the Upper Tribunal (UT) found that a single supply cannot be artificially split to allow reduced rate to apply to one component of that supply.

  • A N Checker made supplies of installing boilers or central heating systems in residential accommodation.
  • Part of these systems comprised energy-saving materials.
  • It used a tool called ‘VAT Optimiser’ to identify energy-saving components which would qualify for reduced rating where supplied in their own right.
  • A N Checker claimed that it should be able to apply reduced rating to those components despite there being a single supply of installation services.

The First-Tier Tribunal found that the supply was a Single supply of the installation and standard rated. It concluded that the reduced rate could not apply to part of a single supply.

The taxpayer appealed.

The UT agreed with the FTT:

  • The legislation for the reduced rating starts by referring to the ‘supply’ not components of the supply. This means the supply as a whole is to be considered.
  • Here, it is a single supply of the installation of the boilers or central heating systems. That, in entirety, must meet the rules for reduced rating to apply.
  • There is no apportionment provision in relation to these supplies, whereas there are for other reduced rated supplies. This illustrates that it is intended to be an all or nothing.
  • Whilst the UT appreciates that VAT on the supply of a boiler or central heating system would differ from the VAT of the components, such as the central heating controls, this is simply because the supplies are totally different, so there does not need to be consistency. This is despite the fact that the system may include the individual component which would have qualified for reduced rating in its own right.

The appeal was dismissed. The supply is a single standard rated supply.


Single or multiple supply?

External link A N Checker Heating & Service Engineers v HMRC [2018] UKUT 292