VAT – Energy-saving materials – Insulation – Reduced rate of VAT – Group 2 of Schedule 7A to Value Added Tax Act 1994 – Respondent manufacturing and installing polycarbonate roof panels for conservatory roofs – Panels used to form roof of new conservatory or replace existing roof in whole or part – Whether qualifying for reduced 5% rate of VAT as “energy-saving materials” within Group 2 – FTT finding that panels qualifying as energy-saving materials since falling within description of ”insulation for… roofs” within note 1(a) to Group 2 – Whether note 1(a) covering only insulating material applied to roof as opposed to roof itself – Appeal allowed
The respondent manufactured and installed polycarbonate roof panels and radiation strips for conservatory roofs. The panels were used to form the roof of the conservatory and could be used either in new conservatories or to replace the roof of an existing structure in whole or part, with the purpose of achieving much higher levels of insulation than would be the case with a conventional conservatory roof.
The appellant decided that the panels and radiation strips did not qualify as “energy-saving materials” within Group 2 of Schedule 7A to the Value Added Tax Act 1994 and therefore did not benefit from the reduced rate of 5% VAT applicable to supplies consisting of the installation of such materials.
The first-tier tribunal (FTT) allowed the respondent’s appeal against that decision. In respect of the panels, it found that they qualified as energy-saving materials as “insulation for… roofs” within note 1(a) to Group 2. The appellants appealed. They accepted the FTT’s decision in relation to the radiation strips but argued that it had reached the wrong conclusion in respect of the roof panels, contending that those panels were not insulation for roofs but instead formed the roof itself.
Held: The appeal was allowed.
While the common feature of the goods listed in note 1 to Group 2 was that they could be expected to produce energy savings once installed in residential accommodation, note 1 provided an exhaustive definition of “energy-saving materials” for the purpose of items 1 and 2 of Group 2. Rather than making the reduced rate available to all types of goods with energy-saving properties that could be installed in homes, only certain types of goods were specified as eligible for the reduced rate. There was a distinction between note 1(a), which specified insulation “for walls, floors, ceilings, roofs or lofts or for water tanks, pipes or other plumbing fittings” and note 1(c) to (j), which specified particular products such as central heating controls or solar panels. Accordingly, note 1(a) presupposed the existence of a roof to which the insulating material was to be applied. The FTT had erred in construing “insulation for… roofs” as extending to the roof itself if it had energy-saving properties, rather than being confined to insulating materials attached or applied to a roof.
Peter Mantle (instructed by the legal department of HM Revenue and Customs) appeared for the appellants; the respondent did not appear and was not represented.
Sally Dobson, barrister
