The European Commission has requested that the UK withdraws the reduced VAT rate of 5% on certain energy-saving products and materials installed in residential properties. The government has already conceded that the the relief was originally too wide and is going to withdraw the reduced rate from installations in relevant charitable buildings. HM Revenue & Customs has published a brief seeking views on the withdrawal of the reduced rate of VAT Revenue & Customs Brief 26/12
However, the government considers the relief in relation to residential properties to be consistent with the EU's VAT Directive. It will therefore be defending this position in any proceedings brought by the European Commission.
Given the current economic climate where, more often than not, cost is put before green credentials, it seems a shame that this relief is being challenged.