The European Commission has requested the United Kingdom to amend its legislation which allows a reduced VAT rate for the supply and installation of energy-saving materials. This measure goes beyond the scope allowed under the VAT Directive according to the Commission.

Member States can apply reduced VAT rates to a limited number of goods and services as listed in Annex III of the VAT Directive. According to the Commission, the list does not include the supply and installation of “energy saving materials”. The Commission's request takes the form of a Reasoned Opinion (the second stage of an infringement procedure). If the legislation is not brought into compliance within two months, the Commission may refer the matter to the European Court of Justice.