Reduced rate roof insulation

Greenspace (UK) Ltd [2020] TC07828

The FTT concluded that the appellant was supplying standard rated replacement roof panels which had insulating properties, not reduced rated ‘insulation for roofs’.

The appellant supplies insulated roof panels for conservatories. The panels were made to measure following a survey of the customer’s property and they were installed into conservatory roofs after the existing panels had been removed, leaving behind the roof frame into which the new panels were slotted. In many cases customers only replaced some of their conservatory roof panels with Greenspace’s product.

HMRC’s view was that, following the UT decisions in Pinevale [2014] BVC 517 and Wetheralds Construction Ltd [2018] BVC 511, the panels were standard rated replacement roof panels. Greenspace considered that it was installing energy saving materials and that the 5% VAT rate applied to its supplies.

Note 1(a) of Group 2 to Schedule 7A of VATA states that an ‘energy saving material’ (the installation of which is reduced rated by Item 1 of the Group) includes ‘insulation for ... roofs’.

The question before the FTT was whether the insulated panels supplied by Greenspace were ‘insulation for roofs’ or whether the appellant supplied replacement roofs (or part). The FTT concluded that standard rating applied for the following reasons (para. 73).

(1)The legislation distinguishes between insulation for a roof and something which is a roof, i.e. reduced rating only applies to things which are added to roofs, not to a supply of the roof itself.

(2)The test in the legislation is one of form, and Greenspace’s supply is in the form of a roof.

(3)The fact that the panels supplied by Greenspace have an additional function (that of insulation) to the function of creating a roof is not relevant.

(4)Greenspace’s argument in favour of reduced rating was based upon the substance of its product (the product is 95% insulating material and is sold as an insulating product) but this ignores the form of the product. Greenspace’s approach was criticised in the Pinevale and Wetheralds decisions.

Greenspace’s attempt to argue that the FTT should focus on the substance of its product and the motivation of its customers in purchasing an insulated roof product was dismissed as follows (para. 84):

‘The critical question is whether the supply is of something which is for a roof, not the supply of a roof itself. No amount of difference in substance, i.e. that what Greenspace has supplied is 95% insulation (by volume), can alter this approach. That is why any attempt to follow the EU law cases about predominant characterisation of a supply is not helpful here: because they cannot alter the form based nature of this VAT exemption’.


Part of Greenspace’s argument regarding how to interpret the reduced rating provisions was based upon the perversity of standard rating its product. The FTT had sympathy with the appellant on this point, it noted that, if the component parts were supplied separately, reduced rating would have applied to 95% of it. The FTT also pointed out that the answer to a perversity such as this is to change the law not to interpret the law in such a way that you override its clear wording (para. 89).






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