Vat 5/17.5%

[gwilliamson]

Hi, all help is appreciated
On the new rules of 5% VAT on heat pump installs my accountant tells me and many other people that a split install with a heat pump in a house only carries a 5% VAt charge to the customer which is good because i have paid 17.5% vat from the wholesaler meaning the VAT man owes me money!. However the Customs and excise exact wording is' 5% Vat is only applicable on heat pump installs or the heat pump part of the system'!? Could anyone enlighten me on this before i end up owing the VAT man loads of money?
Many thanks

[Argus]

Yes, I think that it is domestic only, but when does domestic become residential?

In other words, if a private house owner puts a heat pump in his own house, then it's domestic. If he owns a string of holiday lets or is a landlord, and installs a heat pump where he doesn't live, what's the rule? I think that?s residential and therefore commercial.

Next, the question is, how much of the installation price is reduced rate VAT?
The budget is not too specific on detail and it is open to the Vat-man's interpretation.

I would suggest that you take your typical domestic heat pump installation quote, and then proportion the elements:

• Design & planning
• Equipment costs: (cost price of the unit)
• Material costs (pipe, wires etc)
• Labour & transport

Then see which parts are Vatted at 5%.
In my view it is only the second element, the unit that is vatted at 5% - the rest comes in with the normal 17.5%

Let your accountant try to find out and earn his fee!

The final question is, are the reduced rates worth it?
We are talking about a fairly small proportion of a small part of a few hundred pounds, which is the cost of most domestic installations in the UK.

How much is your time worth?
________
Mercury Marauder

[Daddy Cool]

It's strting to look like the ECA when it first came into force, with everyone banding it around, but no-one really knows how it works.

I have read the tax website relating to the issue, and it's as clear as mud. Especially as 'heat pumps are a young technology' according to them.

i have sent an e-mail to the man responsible in answering questions and i'm waiting on his answer, or at least waiting for a concise answer which may take a little longer.

As soon as i have a reply, i will post it on here.