We have been doing work with HMRC on VAT at the STA. This is mainly to confirm the ongoing inclusion of PV as energy saving goods that qualify at 5% and also the vexed questions surrounding storage. There has been some hiatus in this due to personnel changes. Will be chasing this.
We still dont have clarity on whether replacing an inverter is 5% or not. However, one interesting point came up from HMRC on repairs. This is from an email exchange between STA and HMRC I was involved in:
3.4 Renewable source heating systems falls under grant–funded scheme section of the
public notice. (
VAT Notice 708/6: energy-saving materials - GOV.UK - https://www.gov.uk/government/publications/vat-notice-7086-energy-saving-materials/vat-notice-7086-energy-saving-materials)
However, if you members install, repair or maintain a solar or thermal panel that was originally installed under a grant–funded scheme (e.g. those of a type provided by government, devolved administrations, local authorities etc.), the reduced rate applies to these works (as per Chapter 3 of Notice 708/6).
This paragraph in his email
I have looked at this again and spoken to a colleague. Repairs to solar and thermal systems would normally be subject to VAT at 20% however, if the repair is to replace the existing solar or thermal panel, then the installation of a replacement panel would be subject to the reduced rate of 5% VAT.
He is referring to installations of
energy-saving materials. (same link as above)
2.9 Solar panels
Solar panels include all systems that are installed in, or on the site of, a building and that are:
- solar collectors such as evacuated tube or flat plate systems, together with associated pipework and equipment, such as circulation systems, pump, storage cylinder, control panel and heat exchanger; or
- photovoltaic (PV) panels with cabling, control panel and AC/DC inverter
I had asked for further disambiguation on the above as wording is everything. We need to ensure inverters are included within this. The wordingon grant funding can also be interpreted in differing ways as it specifically refers to "the homes of less well off people"
Since reading this thread, have raised it again to try and get this put to bed.
Getting this kind of thing sorted along with looking at storage, regulation, the post FITs word in 2019, business rates are just a few of the many things being addressed by the STA. We rely on members to actively participate to drive all this forward. Most of you guys are not members but benefit from all this work. How about joining us and getting involved? Its your future and prosperity that is at stake here.
Will keep you posted on VAT.
