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Vat on Energy Saving Loft Insulation etc

Vat on Energy Saving Loft Insulation etc

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I have a client who is into Loft Boarding and Insulation. Which can include new or replacement of Loft Ladders and hatches, loft lights and shelves.

He plays by what he sees are the rules under VAT Notice 708/6. So loft insulation installs are charged at 5% and if he needs to install a new loft hatch because there wasnt one already there then that is at 5% to.

There is a big competitor out there who charges 5% on all of it, regardless. So this company is charging 5% on loft Insulations, loft ladders loft hatches, raised loft zone flooring, loft lights etc even if there was some already there, so replacements.

My client has got lots of eveidence of what this other company is doing, interms of people he has been out to quote for are showing him the quote showing him that they are being charged 5% on the whole lot.

My Client has approached the directors of the company, in a friendly way and asked them how they 'get away with it' and the reponse he has got is that they were investigated about 18 months ago and they won the appeal! and going forward they are allowed to charge the 5% on everything.  My Clients response was, oh so that has set a bench mark for others in the industry so we can all charge the same.   Oh no said the director, its still a bit 'Iffy'

Obviously this big company is cheaper on quotes just because of the VAT and my client is getting rather annoyed.  Has anyone got any advice apart from speak to the VAT office, because lets face it, the frontline staff on the VAT phones are not clued up and in the meantime my client is loosing business.







Replies (5)

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By lesley.barnes
23rd Mar 2021 11:23

Do you know the name of the big company and have you tried googling to see if you can find any tribunal case in their name v HMRC? That might give you an idea of what was their argument and how they won. Other than that if it's a bit "iffy" the big companies words I would steer well clear.

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Replying to lesley.barnes:
By rachypachy167
23rd Mar 2021 12:08

Thanks, I am doubting that there was even a tribunal as I have looked and cant find one. And yes the fact the other company is saying "Iffy" just smacks to be he could be telling porkies.

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Jason Croke
By Jason Croke
23rd Mar 2021 12:01

I'm not aware of any Tribunal cases on loft insulation, it might be a local VAT inspection/assessment which the business won on appealing to HMRC (rather than appealing to the tribunal). There was a case on conservatory roof conversions but that was not on the basis of loft insulation but whether the new roof was insulation or a replacement roof.

Often its an attitude towards risk, I had a client years ago who did loads of bathroom/wet room installs, almost all his clients were "disabled" and the customer signed a bit of paper stating they were disabled and eligible for zero rating.

I was never truly convinced that ALL of his clients were disabled, but how do I check any of this? I can't speak to the customer, even if I did would I challenge their disability? HMRC were satisfied he had the signed forms and HMRC didn't query as to why most of his bathroom jobs were zero rated.

The same happened with zero rating for cars, who knew there was so many disabled people lining up to buy Range Rovers and Porsche Macans, in the end HMRC changed the law to narrow the scope of zero rating, but dealers must have made a fortune whilst they could stick a twirlyknob (censored if I add a space) on the steering wheel of a Ferrari and call it a disabled adaption.

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Replying to Jason Croke:
By rachypachy167
23rd Mar 2021 12:11

Your response has made me laugh.

Presumably if my client got customers to sign forms to say there wasn't already a loft hatch and ladder already in place for example and therefore that can be charged at 5%, if an investigation came about surely HMRC can go to those end users and check with them ? Not that I am saying thats what he should do.. Just wondering if HMRC would go that far.. ?

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Replying to rachypachy167:
By Hugo Fair
23rd Mar 2021 13:15

"Presumably if my client got customers to sign forms to say there wasn't already a loft hatch and ladder already in place for example and therefore that can be charged at 5% ..."

I'm not condoning (or even encouraging) such an approach, but if such a form came into being it's important that its design demonstrates that the client made the decision on answering each question - without inducement or being led.
* Is a loft hatch and ladder already in place prior to commencement of work? Y/N ... would be fine; whereas
* Would you like to pay a lower rate of 5% VAT (because there wasn't a loft hatch and ladder already in place)? ... is unlikely to impress HMRC (or your accountant).

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