In Greenspace (UK) Limited v HMRC [2020] TC07828, the First Tier Tribunal (FTT) found that supply and installation of conservatory roof insulation in the form of insulated roof panels is a standard-rated supply for VAT.
Greenspace is a UK-based company whose main business in the UK is the supply of conservatory roof insulation in the form of insulated roof panels. HMRC assessed Greenspace to VAT on the basis that its supplies of roofing panels were standard-rated supplies.
Greenspace argued against the assessments on the basis that:
- The services should be charged at the reduced rate of 5%
- The predominant purpose of the supply of roofing panels was the supply of insulation for roofs
- This should be treated as the supply of 'energy-saving materials' under Note 1(a) Group 2 of Schedule 7A Value Added Tax Act 1994 (VATA 1994).
- The total amount of VAT in dispute was £2,581,092.
HMRC argued:
- That there must be a distinction between insulation material for a roof and the roof itself
- There was no sliding scale on what is the predominant purpose.
- The supply should be confined to insulation.
- If it extends further than that, to a roof or a replacement roof itself, it does not meet the strict definition of 'energy-saving materials' under Note 1(a) Group 2 of Schedule 7A Value Added Tax Act 1994 (“VATA 1994”).
Greenspace argued that its supply of roofing panels did not amount to a roof or a replacement roof. Greenspace appealed to the FTT against those assessments.
The FTT considered that:
- Greenspace's supply of roof panels could not be anything other than the supply of a ‘new roof’.
- If what has been provided is a roof or part of a roof, that supply cannot fall within the definition of energy-saving materials ‘for a roof’.
For these reasons Greenspace’s appeal was dismissed and HMRC’s assessments for each of the VAT periods in dispute are confirmed.
Comment
Note, changes came into effect from 1 October 2019 which only allow the installation of energy-saving materials and the labour to be reduced rate provided any one of the social policy conditions is satisfied or the 60% threshold is not exceeded.
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