September 1, 2014 | Dave Brown | 2 Comments Keeping up the good work, here’s my first new substantive post – HMRC have announced that intelligent lighting can now be zero rated, where applicable. Or else 5% rated, again if applicable. But first, a bit of background: Since 1973, with a few exceptions, there has been no VAT cost, in building a new house. Times have changed, technology has certainly changed, but H M Revenue & Customs (HMRC) have not kept up. They have generally not allowed anything resembling an appliance to be free of VAT, and this has excluded cookers, fridges, TV, audio equipment and the like. Over the last ten years, however, HMRC have embraced new technology in the way that ostriches have embraced sand and anything beyond a simple switch has been deemed liable to VAT. Their view has been influenced by the fact that an ‘intelligent lighting/heating system’ would not normally be installed in the average new house. Now, however, HMRC have at last reached the real world and (without any fanfare or publicity) have re-printed their main guidance on construction work (Notice 708). In the section about what has changed, they tell us that: central controls for light, heat and ventilation… are regarded as.. examples of articles ‘ordinarily’ incorporated in dwellings. Intelligent lighting systems are also accepted but not the accompanying remote control handsets. This means that zero rating prevails, but as there has been no recent change to the law, it can be assumed that this has always been the case, despite the fact that in the week or two since it was published, I’ve had HMRC tell a client that it will not be retrospective. A bit of caution should, however, be exercised, as some apportionment may be required if the same controls that look after heat and light are also used to control TV/audio/video equipment. Another thing to bear in mind is that even although appliances etc. cannot be zero rated, installation services can be zero rated as long as the equipment is ‘incorporated’ ie not just plugged in, but firmly affixed.