In Conservatory Roofing Systems Limited (CRSL) v HMRC [2020] TC07976, First Tier Tribunal (FTT) found that supplies of composite insulated roofing system are not the ‘installation of insulation’ and are not subject to VAT at the reduced rate.

CRSL supplies insulated conservatory roofs.

  • In 80% of cases, it does not remove existing poly-carbonate roof panels. Instead, a new external light-weight roof tile system is secured to the outside, whilst on the inside, an insulating material is provided and plasterboard is applied to a bespoke timber frame.
  • In the remaining 20% of cases, roof panels are removed because they are too heavy to safely leave in-situ.

In CRSL’s view, there was no alteration made to the existing conservatory roof structure, therefore its sales were subject to VAT at the reduced-rate (5%) on most of its insultation materials and it applied 20% VAT on additional components.

  • In 2018, HMRC refused CRSL’s input tax claim for £15,618.86 on the basis that CRSL provided replacement roofs, chargeable at a standard rate of 20% rather than an ‘installation of insulation’ at the reduced rate of 5% and an assessment was issued against CRSL for underpaid output tax.
  • The FTT was asked to consider whether the work completed by CRSL can be classified as ‘installation of insulation for roofs’ chargeable at 5%.

The FTT held that the supplies extended far beyond installing insulation to a roof:

  • It would be artificial to split the supply: the predominant element is the construction of an entirely new roofing system. The installation of energy-saving materials is ancillary in this case.
  • If only insulation material was supplied without the installation of timber, plaster boarded subframe and tiles to the roof exterior, that purpose would not be achieved.
  • The majority of materials and services that were provided by CRSL are not covered by the exhaustive list set out by Note 1(a) of Group 2 to Schedule 7A, VATA94.
  • A typical consumer would, on the basis of both CRSL's marketing material and the nature of the finished product, consider that they were receiving a new roofing system.

The FTT found that CRSL does not make a supply of ‘insulation for roofs’ and that as such its supplies cannot be classified as reduced-rated for VAT purposes.

The appeal was dismissed.

Comment

This case follows similar findings in Greenspace (UK) Limited where the FTT found that supply and installation of conservatory roof insulation in the form of insulated roof panels are a standard-rated supply for VAT.  

Useful guides on this topic

Input VAT claims: Pre-registration
When can pre-registration input VAT be recovered? What are the time limits and restrictions? 

CIS: Construction Industry VAT reverse charge
The Construction Industry Scheme (CIS) VAT Domestic Reverse Charge (DRC) applies to supplies of construction services from 1 March 2021

External Link

Conservatory Roofing Systems Limited v HMRC [2020] TC07976


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