- March 20, 2013
- Posted by: Josiah Hincks Solicitors
- Category: Business Law Updates
The manufacturer of an innovative gel which improves the heat retaining qualities of brick walls has won a tribunal ruling that it is an ‘energy saving product’ and thus benefits from Value Added Tax (VAT) relief designed to encourage the use of green technologies to conserve power.
Safeguard Europe Limited’s ‘Stormdry’ product is a gel that is injected into walls to create a thick waterproof barrier that yields significant energy savings without having any impact on the appearance of the outward façade. The company itself is obliged to charge its customers VAT on the product at the standard rate but argued that those engaged in its installation are entitled to charge a reduced rate of VAT by virtue of note one, group two, schedule 7A of the VAT Act 1994.
Upholding the company’s arguments, the First-Tier Tribunal accepted that, despite the product’s name and its waterproofing characteristics, the primary and dominant purpose of installing it is as insulation to save energy. The tribunal noted that, unlike waterproof paint, Stormdry is non-decorative and, unlike glass, the product is a form of insulation in itself.
Safeguard, as the product’s manufacturer, will reap no immediate benefit itself from the tribunal’s decision. However, the ruling underlines the environmental credentials of Stormdry and is likely to improve the product’s market penetration as ultimate consumers will only have to pay a reduced rate of VAT on its installation.