HMRC now state that if an installer installs a full central heating system with solar panels etc, then the VAT rate is 20% – not 5%.

Kevin Treanor – of VAT Optimiser Informs CORGI Technical of Changes to VAT

HMRC have altered Vat Notice 708/6 which is their guideline for our industry in the use of 5% VAT on energy efficient controls. Section 2.3.3 now states that a central heating system installed as the principal supply along with energy efficient controls now renders the entire installation at 20% VAT. This has always been their argument, they have simply updated their 708/6 notice. No doubt some PR on their part will ensue.

Extract from VAT Act 1994, section 29A.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&id=HMCE_CL_000514#P70_7073