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Posted Mon, 04 Dec 2023 13:34:19 GMT by AnotherDaveB
I had a builder install air conditioning in my home. He wants to charge me 20% VAT on the materials and his labour. However, every article I've read online (from his competition) and my reading of VAT notice 708/6 indicates 0% VAT should be charged. He's saying I need to pay VAT on his materials and time because VAT is 0% rated only for new builds or work done under a grant from the RHI. I believe he is mistaken, but have the money put aside in case I'm wrong. As I read it, I pass all the tests for an ESM installation given in VAT Notice 708/6 , specifically: 1. The work was done in June & Nov 2023 (i.e. the 60% and social policy conditions no longer apply) 2, The work was done on my home (i.e. residential property) 3. The installation was a section 2.12/2.11 'air source heat pump' based heating and cooling AC system (cf. section 2.20 'HMRC's understanding is that most air conditioning units are air source heat pumps'. The specific brand I bought is capable of both heating and cooling) Can you confirm that, in principle and assuming I've been truthful in my declaration of facts in 1-3, the materials and installation labour here should be zero rated? Additionally, it would help in my discussion with the builder if HMRC could confirm that 0% VAT due to ESM is not connected to or dependent on the work being done on a new build, nor is it connected or dependent on a grant from the RHI. Thanks in advance.
Posted Mon, 04 Dec 2023 16:28:46 GMT by HMRC Admin 8 Response
Hi,
The zero rated relief for energy saving materials applies to new and old residences and would not need to be carried out under a grant.
So as long as the goods are qualifying energy saving materials and they are installed in to your home then they should qualify for the relief.
Thank you.

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