VAT rate on PV fitted on a barn?

[willabovebeyond]

According to HM Revenue & Customs, the 5% VAT rate applies to:

residential accommodation (see paragraph 2.16); or
a building used solely for a relevant charitable purpose (see paragraph 2.17).

My question is; does the reduced VAT rate apply for an installation done on a barn roof if the power is still being sent back to the farm house (a residential accommodation).

The reason I ask is because I called HM Revenue & Customs to confirm this and the guy on the end of the phone said that the panels needed to be fitted ON the 'residential accomodation' for it to apply, and as a barn wasn't 'residential' then this would fall under the 20% VAT rate.

I replied with, so surely that means an installation on a detached garage roof has the 20% VAT rate even though that is supplying the house next to it?

He then became unsure and said he would call me back on Monday when he has found out.

Would someone be able confirm which is correct please?

Cheers, Will

 

[TedM]

It's covered by the VAT Act 1994 Schedule 7A - http://www.legislation.gov.uk/ukpga/1994/23

The wording used is not clear as to whether the items installed need to be physically on or in the actual dwelling. They do need to be for the use of the dwelling.

But HMRC are always 'right'.

 

[willabovebeyond]

Thanks for the reply Ted.

I just called Segen and they said that the 5% would apply providing the power was supplying the farm house (the dwelling/residential accommodation).

Has anyone had any experience of this previously? If so what VAT applied to that?

 

[BruceB]

The wording used in this HMRC document at para 2.16
HM Revenue & Customs
is "....The installation of energy-saving materials is only reduced-rated if they are for use in the following types of residential accommodation:...."

Clearly solar panels are never used directly "in" a dwelling, but the output from the panels+inverter is. As solar panels on the roof are clearly within the scope, then provided the electricity from the panels+inverter is routed through the dwelling for use there, then I believe it is reasonable to infer that also falls with scope. I would see no problem as a installer charging 5% if the PV was ground mounted or on a building within the curtilage of a dwelling. I would begin to hestitate if it was on an agricultural building outside the curtilage and the electricty supply was covering more than the dwelling.

By the way, I disagree that HMRC are always right - there are regular examples where they misinterpret the law to their own advantage. However it take a brave person to take them on!

Regards
Bruce

 

[willabovebeyond]

Thanks for that Bruce, that is what I thought and that was what Segen thought also. I look forward to hearing what HMRC say on Monday (providing they call back!).

 

[TedM]

Of course what I meant was "HMRC are always right - unless you are willing and able to prove otherwise in a court".

 

[willabovebeyond]

Had a call from a nice lady at HMRC this afternoon. She confirmed that so long as the power generated is used in a domestic/residential dwelling (or any other in the list on the HMRC website) then it is classed as the lower VAT rate.