12th August 2015 – Simon Misiewicz
Are you enjoying the reduced rates of VAT for:
- Commercial to residential conversions / single to multiple occupancy house conversions. (1)
- Refurbishing a property that has been empty for more than two years. (2)
- Installing energy efficient goods into a property.
Could it be it be at an end?
In 2012, the European Commission commenced infraction proceedings against the UK claiming that its application of the reduced rate for the installation of energy saving materials was not in accordance with EU law.
The European Court published its decision on 4 June 2015. The court agreed with the Commission that the UK had implemented the relief in a way that was not in accordance with EU law.
In essence, the court found that the UK had applied the reduced rate too widely. The reduced rate should be introduced as part of a social policy and should be targeted to those whom the policy is designed to help. A social policy cannot apply equally to everyone. In addition, the supplies must amount to a renovation or alteration of housing to be consistent with EU law potentially casting doubt on some of the installed goods currently subject to VAT relief. (3)
There is nothing to worry about right now but please note that change is afoot once more with VAT.
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