• Service: Tax, Global Indirect Tax, International Executive Services, International Tax
  • Type: Regulatory update
  • Date: 10/11/2013

United Kingdom - VAT rate for energy-savings materials project 

October 11:  A case before the UK First Tier Tribunal involves the supply of certain energy-saving materials that, when supplied on their own, are subject to value added tax (VAT) at a reduced rate but, when supplied and installed as part of a larger installation project, are subject to the “standard” (higher) rate of VAT.

The taxpayer had apportioned the goods and labour to reflect the energy saving products—thus, accounted for VAT on a proportion of the supply at the lower rate. The taxpayer took the position that despite there being a single supply, there was a discrete and specific reduced rate element that must be carved out.

HM Revenue & Customs considered that there was a single supply subject to VAT at the standard rate, and the tribunal essentially agreed finding that there was no specific carve out in the law.

Read an October 2013 report [PDF 554 KB] prepared by the KPMG member firm in the United Kingdom: Weekly Tax Matters (11 October 2013)

Also included in the KPMG report are the following topics:

  • Court of Appeal action in a case concerning offshore motor breakdown insurance structure and input tax recovery on repair services
  • First Tier Tribunal case on validity of a discovery assessment in case in which there was no dispute that the taxpayer owed a significant amount of capital gains tax if the assessment could be made
  • The pension lifetime allowance is currently ₤1.5 million, but scheduled to be reduced to ₤1.25 million on 6 April 2014

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