CIPHE's GreenPlumb scheme: committed to training.

Trade bodies warn industry about VAT rate

Published:  28 April, 2011

SOLIHULL: HM Revenue and Customs has clarified the rates for VAT that plumbers must charge when work involves energy saving materials.

Certain energy-saving materials can be charged at a lower rate of VAT not when supplied as part of a system.

The Association of Plumbing and Heating Contractors in England and Wales sought guidance from HMRC. HMRC stated that energy-saving materials are eligible for the reduced rate only when they are supplied and installed in isolation.

The lower VAT rate is not applicable when these materials are ancillary to another supply or part of a greater supply.

Under basic VAT principles of single/multiple supply, any element, which is integral or incidental to a greater supply, must adopt the same liability of that greater supply, HMRC said.

This means that if the supply and installation of a central heating system is liable for VAT at the standard rate of 20%, any energy-saving materials incidental or integral to the system must also have the same standard-rated VAT liability.

Under the same principles, if the central heating system were installed as part of a zero-rated or reduced-rated building project, the supply and installation of the energy-saving materials will have the same liability.

The example of a system comprising boiler, radiators, copper pipe, radiator valves and controls was used for further clarification. Supplied together, they form a single central heating system, even though some components of the central heating system are energy-saving materials and would be eligible for the reduced rate of VAT.

As there is no reduced rate for the supply of a whole central heating system, the supply incurs the standard 20% VAT rate.

The Chartered Institute of Plumbing and Heating Engineering has introduced a free scheme that will make it easier for consumers to pick a professional when considering integrating renewable/ sustainable technologies and solutions within their homes.

Under the GreenPlumb scheme, members of CIPHE that have embraced these technologies and committed to training and Continuing Professional Development, will be equipped with the tools to deliver a green service, with the ability to advise members of the public with regards to the integration of green solutions, and their ongoing maintenance.

GreenPlumb is billed as an ongoing 'green' campaign committed to meeting the Government's Carbon reduction commitments. It also protects consumers against non-professional installers with inadequate knowledge and understanding of sustainable/green technologies GreenPlumb is open to those members of the CIPHE who are practising in the plumbing and heating industry at the level of 'member' or 'fellow'.

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