There are currently three companies (that we're aware of) selling water-cooled (not water-source) heat pump systems with 0% VAT quoting the 708/6 exemption. Our interpretation is only water-source heat pumps would be exempt because they are using the natural latent heat within the body of water as an energy source (a "green" source). A water-cooled system simply connects into the incoming water supply of the premises - a paid utility. Can you please provide a definitive response on whether water-cooled heat pumps qualify for 0% VAT or not.