- I accept, as do HMRC, that one purpose of the Greenspace roofing panels is to provide insulation, but that does not determine whether the supply falls within the exemption at Schedule 7A.
- 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, ie 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.
- This is the approach taken in Beco referring to Note 1, group 2 Schedule 7A:
“it is speaking of the materials before they become part of the wall, etc. The legislation is not talking about the wall itself. The legislation looks to the materials supplied which will, following installation, form part of the wall” [31]
- In my view in taking this approach Greenspace is attempting to apply the arguments accepted by the FTT in Pinevale looking at the substance of the supply, or the predominant purpose of the supply; an approach which was rejected in both Pinevale in the Upper Tribunal and Wetheralds. There is no sliding scale here; the question is simple, if what has been provided is a roof, or part of a roof, that supply cannot fall within the definition of energy saving materials “for a roof”. The UT in Wetheralds stressed this point:
“However, as Pinevale sets out, in interpreting the statutory language the critical question is whether the supply of energy-saving materials is for a wall, floor, ceiling etc, or is a more extensive supply” [31] or
“whether what is supplied is confined to insulation or extends further than that, to a roof or a replacement roof itself” [32]
- I agree that it may seem perverse that if Greenspace’s supply had amounting to sticking the Styrofoam insulation blocks manufactured by Thermotec to existing roof panels, they would have obtained a more favourable VAT result, but that is not what Greenspace was supplying (though it may have been what Thermotec was supplying).
- The authorities accept that questions of categorisation like those arising in respect of the exemptions at Schedule 7A can give rise to “fine distinctions”, but in my view no amount of arguments about the substance of these supplies can push Greenspace’s supplies into this category; the VAT legislation is clear and prescriptive as far as the categorisation of this exemption is concerned.
- The answer to any perversity in a case like this is to argue for a change in the legislation to include the type of insulated conservatory roof panels which have been supplied by Greenspace, rather than use perversity as the basis for interpreting legislation to override its clear wording.
CONCLUSION
- For these reasons Greenspace’s appeal is dismissed and HMRC’s assessments for each of the VAT periods in dispute are confirmed.
Source: FTT
