A roof replacement company has been hit with a £2.5 million tax bill after a ruling that the insulated roof panels it supplied did not qualify for a VAT-reduced rating.
Greenspace (UK) Ltd supplied the roof panels to residential customers, which were fitted onto existing conservatory roofs.
But after First Tier Tribunal (FTT) and Upper Tribunal (UT) rulings, the Court of Appeal confirmed that the roof panels were not eligible for a VAT-reduced rating.
The FTT had rejected Greenspace’s appeal on the basis that their supplies could not be treated as anything other than a new roof or part of a roof. This was later upheld at the UT.
Energy saving
In the Court of Appeal, Greenspace argued that the panels were the supply of insulation for a roof or something more extensive, namely the installation of the roof itself.
The company had charged customers VAT at the reduced rate of five per cent on the basis that the supply was one of insulation for roofs and therefore ‘energy-saving materials’ under section 7A Value Added Tax Act 1994 (VATA).
However, HMRC assessed those supplies to be taxable at the standard rate of VAT and raised a VAT assessment on 17 June 2020 of £2,581,092 for the periods of December 2017 to December 2019.
Reduced rate
The company had argued that the reduced rate of VAT applied to the installation of ‘energy-saving materials’, which includes ‘insulation for roofs’.
Although the Court of Appeal held that while the panels did provide insulation when they were installed, they also protected the roof from the outside elements, which the court believed was something more than a supply of insulation for roofs.
The Court found that Greenspace was not supplying insulation for roofs (although the panels have insulating properties, they also have other characteristics), and accordingly the reduced rate of VAT did not apply.
Need advice on VAT payments and other tax matters? Contact us today.
Our BLOG
Are you missing out? The deadline to boost your State Pension is approaching
TESTIMONIALS
The staff at CST are always very friendly and approachable.… Read more “Mr JD Dolling, SW Heating Equipment Ltd”
We have been with CST for more than seven years… Read more “Doris Francis, Engineering Services (Bridgend) Ltd”
Our business has been handled by CST for many, many… Read more “Mr & Mrs Rise”
I moved my business to Clay Shaw Thomas because I… Read more “Sandra Wilkinson of Sage Marketing”
The audit was well planned and executed efficiently, with minimum… Read more “GE Carpentry”
Privately and within the company Clay Shaw Thomas provides a… Read more “Seashore Enterprises”
I am very happy with the service from CST. An… Read more “Mr Atkinson “
The family connection with CST goes back many years and… Read more “Dr Jones”
CST are very efficient, courteous and proactive when dealing with… Read more “Mr CMG Adams”
I have been a client for over twenty years and… Read more “Mr J T Wall”
Always one step ahead of the game, CST have helped… Read more “Mr RT Evans”
CST Staff always give unbiased advice in a clear and… Read more “Mr L Branfield”
It has been a professional pleasure working with CST, they… Read more “Mr P Jenkins”
SUBSCRIBE to our list
If you would like to see full details of our data practices please visit our Privacy Policy and if you have any questions please email tellmemore@clayshawthomas.com.