VAT SERVICES
(scotland) Limited
  • 0141 636 9353
  • 0141 636 9490
  • 0141 636 9492

VAT on supplies of energy-saving materials installed in residential accommodation is to increase.

The rate will go up from its current 5% reduced-rating to 20% standard-rating, making it more expensive to insulate residential buildings.

This is a result of a recent European Court of Justice ('ECJ') judgment in the infringement proceedings against the UK for applying a reduced rate of VAT to the supply and installation of energy-saving materials in residential accommodation under the Value Added Tax Act 1994, Schedule 7A, Group 2.

The ECJ held that the UK legislation of a reduced-rate of VAT to the supply and installation of energy-saving materials in residential accommodation was not allowed under EU VAT legislation (i.e. EU VAT Council Directive, Articles 98(2), Annex III Categories 10 and 10(a)).

The consequence of this judgment is that the UK will need to make provision for the withdrawal of the reduced rate of VAT for the supply and installation of energy-saving materials in residential accommodation.

The change to the VAT liability of such supplies will be prospective and there is likely to be a transitional period to replace the current VAT rules.

Businesses affected should continue to make their qualifying services of installed energy-saving materials at 5% until HMRC provide information on the changes to the current UK VAT legislation position for such supplies of installed energy-saving materials.

Who is potentially affected?
Landlords, tenants and energy efficient organisations.

How can VAT Services (Scotland) Ltd help you?
To assist your business or organisation with managing the change and ensuring the correct VAT liability is applied at the proper time.

Contact us

Should you wish further information on the above, please do not hesitate to contact Gary using the details outlined below.

 

Gary Moore
Direct line 0141 636 9353
Mobile 07812 061 582
Email This email address is being protected from spambots. You need JavaScript enabled to view it.