The Court of Appeal has dismissed an appeal that the supply and installation of insulated roof panels should be treated as the installation of energy-saving materials and as such subject to the reduced rate of VAT per VATA 1994, Sch. 7A, Grp. 2, items 1 and 2 (Greenspace (UK) Ltd v HMRC [2023] EWCA Civ 106).
The company supplied and fitted bespoke panels to existing conservatory roofs. The panels had insulating properties and comprised a layer of close cell extruded polystyrene foam (supplied under the trade name “Styrofoam”) covered with a thin aluminium layer and a protective powder coating.
Both the First-tier Tribunal ([2020] UKFTT 349 (TC)) and the Upper Tribunal ([2021] UKUT 290 (TCC)) had dismissed the appeal for the claim for the lower rate arguing that “the supplies made by Greenspace must also be treated as something which is more than insulation, the supply of a roof rather than something for a roof”.
The Court of Appeal judged that the FTT had made a material error in law, there was not a binary choice to be made as to whether the panels represented a supply of insulation for roofs or a roof itself. As such arguments over whether the panels formed a roof in themselves were irrelevant, the only issue was whether the supplies met the test in Note 1(a):
“the question posed by Note 1(a) is whether supplies are ‘insulation for roofs’ using those words in their ordinary sense, applied strictly but not restrictively. If the supply in question is of something more than or different from insulation for roofs, then it will fall outside Note 1(a) and the reduced rate will not apply.”
Accepting that, the Court judged that:
“the Appellant’s panels do provide insulation for the conservatory on which they are installed but they also protect the conservatory from the outside elements. They may have other characteristics as well, but these two characteristics are fundamental aspects of the product and mean that the supplies fall outside Note 1(a).”
Despite the earlier error in applying the law the Court ruled that the FTT was not wrong to have dismissed the appeal, there had been no injustice and there was no good reason to remit the case back to the FTT or the UT.
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