Greenspace Ltd v Revenue and Customs Commissioners
| Jurisdiction | UK Non-devolved |
| Judgment Date | 22 November 2021 |
| Neutral Citation | [2021] UKUT 290 (TCC) |
| Year | 2021 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
[2021] UKUT 290 (TCC)
Mr Justice Leech, Judge Jonathan Richards
Upper Tribunal (Tax and Chancery Chamber)
Value added tax – Reduced rating – Supplies of insulated roof panels – Whether insulation for roof – VATA 1994, Sch. 7A, Grp. 2, note 1(a) – No – Appeal dismissed.
The UT upheld the decision of the FTT in Greenspace (UK) Ltd [2020] TC 07828 that the appellants supplies constituted a roof rather than insulation for a roof and were standard rated.
The UT upheld the decision of the FTT in Greenspace (UK) Ltd [2020] TC 07828.
Greenspace supplied and fitted insulated roof panels onto the pre-existing conservatory roofs of their customers. The panels are made to measure and coloured to match the existing roof colour. Existing glass or polycarbonate panels are removed, and the new panels are slotted into their place on the existing roof structure.
The FTT held their supplies were of roofs and standard rated rather then reduced rated insulation for roofs. Greenspace argued they had failed to apply the legislation correctly in
- rejecting Greenspace's submission the question was one of fact and degree and depended on the nature and extent of the supply;
- predicating their decision on the state of the conservatory mid-way through the installation process;
- approaching matters on the basis that because the roof panels were a form of roof covering Greenspace were necessarily incapable of being insulation for a roof; and
- making various discrete errors.
Both parties agreed there was a distinction to be drawn between a supply of insulation for roofs that fell within VATA 1994, Sch. 7A, Grp. 2, note 1(a) and was subject to a reduced rate of VAT, and the supply of a roof which was standard rated. That distinction was articulated in R & C Commrs v Pinevale Ltd [2014] BVC 517 and later R & C Commrs v Wetheralds Construction Ltd [2018] BVC 511.
The FTT had to evaluate the primary facts and, in the absence of an error of principle, the UT could not interfere with that evaluation.
In rejecting the first ground of appeal, the UT found the FTT was entitled to focus on what Greenspace provided and ask itself whether the overall supply involved Greenspace supplying a roof or insulation for a roof.
In relation to the second, the UT found the FTT was considering Greenspace's contention that its supplies were insulation for a roof and was entitled to consider which roof those supplies were insulating.
While acknowledging that paragraphs of the decision read in isolation could infer the unwarranted assumption in the third ground of appeal, and that some of the terminology used had been confusing the UT found the decision, read as a whole, did not contain any error of law.
The other discrete errors were either not material or dismissed by the UT.
Pinevale and Wetheralds established a difference between a supply of a roof and a supply of insulation for a roof but neither set out any mandatory process that an FTT must follow to determine the nature of a supply in any particular case. The FTT was entitled to adopt the approach it did, and the appeal was therefore dismissed.
It is a common misconception the UT must agree with the conclusions of the FTT. This decision aptly illustrates that is not the case. The question for the UT was whether, as a matter of law, the FTT was entitled to conclude as it did, rather than re-evaluating the findings of facts to reach its own conclusion. In this instance, the FTT followed the relevant authorities on the interpretation of VATA 1994, Sch. 7A, Grp. 2, note 1(a) and evaluated the facts in an appropriate manner so the appeal had to be dismissed.
Hui Ling McCarthy QC and Edward Hellier, instructed by Mazars, appeared for the appellant
Joanna Vicary, instructed by the General Counsel and Solicitor for Her Majesty's Revenue and Customs, appeared for the respondents
[1] Conservatories can be too hot in summer and too cold in winter. The appellant company (“Greenspace”) seeks to address this problem by supplying and fitting insulated roof panels to its customers' conservatories. The question raised in this appeal is whether the supply of these panels is subject to a reduced rate of VAT on the basis that it is a supply of insulation for roofs, or whether it is subject to the standard rate of VAT on the basis that it is a supply of a conservatory roof itself. In a decision released on 27 August 2020 (the “Decision”) and reported with reference [2020] TC 07828, the First-tier Tribunal (Tax Chamber) (the “FTT”) held that Greenspace's supplies were of roofs and so were standard-rated. With the permission of the Upper Tribunal, Greenspace appeals against that decision.
[2] Greenspace argues that the FTT failed to apply the legislation correctly, having regard to the relevant authorities. We therefore start with the legislation and those authorities.
[3] By s29A of the Value Added Tax Act 1994 (“VATA 1994”), a reduced 5% rate of VAT is charged on any supplies of a description specified in Schedule 7A. Group 2 of Schedule 7A specifies:
- Supplies of services of installing energy-saving materials in residential accommodation.
- Supplies of energy-saving materials by a person who installs those materials in residential accommodation.
[4] Note 1 to Group 2 provides a definition of “energy-saving materials” which, so far as material to these proceedings, is as follows:
- For the purposes of this group energy-saving materials means any of the following:insulation for walls, floors, ceilings, roofs or lofts or for water tanks, pipes or other plumbing fittings.
[5] Both parties agree that a distinction is to be drawn between a supply of “insulation … for roofs” (which is subject to the reduced 5% rate of VAT) and a supply of a “roof” itself, which is standard-rated for VAT purposes. That distinction was articulated in the decision of the Upper Tribunal (David Richards J as he then was) in R & C Commrs v Pinevale Ltd [2014] BVC 517.
[6] The Upper Tribunal's decision in Pinevale was brief and needs to be understood in the light of some of the FTT's findings of fact, which were not challenged or over-turned on appeal (even though the appeal was successful). Pinevale supplied and fitted “Insupolycarbonate Roofing Panels”, which had some insulating properties, as replacements for existing conservatory roof panels with few insulating properties. The FTT's decision in Pinevale contained relatively few findings as to how Pinevale fitted the replacement panels. Greenspace showed us pictures of Pinevale's panels and invited us to draw the inference that since (i) they were thicker than glass and (ii) they were being supplied as replacements for glass panels, some significant modifications to the conservatory structure would be required in most cases to accommodate the thicker panels. We do not consider that, at this remove from the facts of Pinevale, we are in a position to make this finding. However, we are prepared to draw the inference that the process of fitting Pinevale's products would have been more involved than the process for fitting Greenspace's products that we summarise at [24] below.
[7] It is not entirely straightforward to tell how precisely HMRC put their case before the FTT. Paragraph 17 of the FTT's decision suggests that HMRC denied that Pinevale's panels were “energy-saving” and characterised them instead as “a more efficient way of double-glazing your house without the use of energy saving materials”. However, paragraph 17 also suggests that HMRC went further and argued (i) that there was a distinction between replacement of a whole roof and the provision of insulation for a roof and (ii) that a supply of “new roof panelling” was not a supply of insulation for a roof.
[8] The Upper Tribunal's summary of the case advanced by HMRC indicates that it involved both propositions set out in paragraph [7] above:
[10] HMRC's case before the F-tT, and on this appeal, is that the panels are not “insulation for roofs” but are the roof itself. So, if an entire existing roof is replaced, the panels constitute the new roof, not just insulation for a roof. Likewise, the replacement of individual panels with Pinevale's panels was the supply of new roof panels, not the supply of insulation for a roof.
[9] In paragraph 17 the Upper Tribunal said:
[17] There is a distinction between Note 1(a), which specifies insulation “for walls, floor, ceilings, roofs or lofts or for water tanks, pipes or other plumbing fittings” and paragraphs (c) to (j) which specify particular products such as central heating system controls or solar panels. A material which is insulation for a roof is not the same thing as the roof itself. It presupposes that there is a roof to which the insulating material is applied. If the intention had been to apply the reduced rate of VAT to energy-efficient roofs or walls, this could have been specified, just as more generally building materials are specified in Schedule 8 …
[10] However, this paragraph did not differentiate between the replacement of “entire existing roofs” and “individual panels” as HMRC had in their submissions. There is a suggestion (but no more) that the Upper Tribunal regarded an individual panel as a “particular product” (of the kind dealt with in paragraphs (c) to (j) of Note 1) which did not constitute insulation “for” a roof falling within paragraph (a). However, that is a suggestion only and it did not form an express part of the Upper Tribunal's reasoning.
[11] In paragraph 19, the Upper Tribunal concluded by saying:
[19] The error, in my judgment, made by the Tribunal was to construe “insulation for roofs” as extending to the roof itself when it has energy-saving properties, rather than being confined to insulating materials attached or applied to a roof.
[12] Again, this paragraph does not distinguish expressly between the replacement of entire existing roofs...
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