INTERNATIONAL TAX PLAZA - UK – HMRC opens a consultation on changes to the reduced rate of VAT for Energy Saving Materials

Details: Published: 09 December 2015

On December 9, 2015 the HM Revenue & Customs opened a consultation titled: “VAT: Changes to the reduced rate of VAT for Energy Saving Materials”. The consultation runs from December 9, 2015 until February 3, 2016.

The consultation document describes the subject of the consultations as follows: “The UK was infracted by the European Commission (‘EC’) on its application of the reduced rate of VAT on energy saving materials (‘ESMs’) and subsequently lost its case in the Court of Justice of the European Union (‘CJEU’). The UK is required to comply with the CJEU’s judgment and amend the UK legislation that makes provision for the reduced rate for ESMs.”

Whereas the scope of the consultation is described as follows: “The purpose of this consultation is to receive comments as to whether or not the proposed legislation achieves its objective and whether the proposed implementation date is likely to cause any problems.”

The consultation document discusses a.o. the following subjects:

· Introduction

o Background

o The Judgement of the European Court

· Changes to the reduced rate for energy saving materials

o Installations complying with a social policy

o Other installations in residential buildings

o Changes to the list of installed goods included within the reduced rate

· Practicalities

· Date of implementation

· Tax Lock

· Tax Impact Assessment