A. Draught stripping for windows and doors is defined in VAT legislation as an energy saving material (“ESM”)
The reduced rate of 5% applies to the service of installing ESMs in residential accommodation (VATA 1994, Schedule 7A, Grp 2, item 1), and also to the supply of those materials by the person who installs them in the residential accommodation (VATA 1994, Schedule 7A, Grp 2, item 2).
Historically the 5% rate of VAT also applied to the installation of ESMs in buildings used for a relevant charitable purpose, but this provision was removed from the legislation with effect from 1 August 2013. The reduced rate of VAT for the installation of ESMs was only intended by the EU to apply to residential accommodation, so the amendment to UK legislation brought it into line with the intention of the Directive.
Consequently, your client will need to charge at 20% to the Church for the installation of draught stripping.
Charities are entitled to VAT relief on certain purchases of goods and services, but the conditions can be complex and eligibility declarations or certificates are often issued in error. As a supplier your client is responsible for determining the correct VAT treatment, so was wise to check the correct position and not take the charity’s statement at face value. This should be standard practice in any business supplying a charity and being provided with a request for VAT relief, whether verbal or in an eligibility declaration.
If you have a VAT query on energy saving materials or on supplies to charities why not contact the VAT Advice Line on 0844 892 2470 to discuss it. Our team of experts have a wealth of experience and can also provide a written consultancy service at £180 per hour plus VAT.
