Hello Joe, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
This is not a zero rated supply. VAT Notice 708 states that such work might be at the reduced rate of 5%. However, whilst the electrical installation clearly comes under Section 8 of the notice, the air conditioning element and work connected therewith would be standard rated.
You will have to issue VAT invoices appropriately apportioned.
A tad complex, I regret, but that appears to be the law on the subject.
Have a look at VAT Notice 708 which you can find here Joe:
Paragraph 2.1 is the relevant bit. You will see that the building involved attracts the 5% reduced rate of VAT, not zero. If the equipment being installed does indeed comprise an air heat pump then the reduced rate of 5% would also be relevant as central heating.
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Well I see your point that it might come under Section 3 and be zero rated. Have a look at Paragraph 3.2 of the notice. If the facts of the case comply with this then a zero rating would be appropriate.
From the position now reached these supplies are zero rated as the building is a qualifying one.
I do accept that VAT Notice 708 is extremely complex as HMRC tries to block as many loopholes to zero and reduced rates a possible..
Delighted to have been of assistance.
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