More on the VAT Cut for the Spectator around the benefit of VAT in and out of EU last para is a good summary the truth lies in between I guess :

Labour’s Chris Bryant was quick to try to scotch Rishi Sunak’s claim that it was only thanks to Brexit that he was able to remove VAT on a number of home energy improvements, such as the installation of solar panels. Within a few minutes of Sunak making the claim, Bryant had tweeted:

'Contrary to what Sunak said, there is already a VAT exemption on solar panels and heat pumps already happens in the EU, so this is not a benefit of Brexit.'

So who is right? Is it Brexit wot gave us our VAT-free solar panels or is it just another Brexit myth, to be dismissed like the £350 million a week claim on the side of the Vote Leave campaign bus?

The truth, interestingly, lies somewhere in between. During Britain’s membership of the EU the country was subject to its VAT rules. Member states were generally required to levy VAT rates of at least 15 per cent. However, there were a couple of exceptions. Members states were allowed to levy a reduced rate of no less than five per cent in one or two areas. Moreover, states were allowed to continue to levy zero rates so long as those zero rates had been in place on 1 January 1991.

It was these rules which allowed Britain to continue to levy zero rates on items such as food, newspapers and children’s clothes, as well as to levy a reduced five per cent rate on domestic fuel. These rules were described as ‘transitional’ – the idea being that one day they would be swept away and VAT harmonised across the EU, which would have meant the UK having to impose VAT on food, for example.

In 1998, that five per cent rate was extended to ‘energy saving materials’ in buildings, which included solar panels. However, in 2015, UK government fell foul of a judgement by the European Court of Justice that its five per cent VAT rate on solar panels was in contravention of EU law. The court ruled that the reduced rate would be admissible if it applied to groups with certain social needs, but a general five per cent rate was not allowed: Britain’s standard rate of 20 per cent would have to be applied instead. As a result, the government came up with the rule that only the over 60s could qualify for solar panels at a reduced VAT rate of five per cent (ignoring the obvious objection that many over-60s are a lot wealthier than a lot of under 60s).

However, last December – nearly two years after Britain left the EU – the European Council approved a proposal to amend VAT rules so as to lower rates on certain goods and services with environmental objectives. Under the proposal, member states would be instructed to set VAT rates between zero and a maximum of five per cent on a basket of goods and services including 'Supply and installation of solar panels on, and adjacent to, private dwellings, housing and public and other buildings used for activities in the public interest.' It also included electric bicycles and waste recycling services. In other words, having taken Britain to court over the matter, the EU is now proposing to adopt the UK policy to which it had objected. The proposal cannot become law without first being voted on by the European Parliament.

The basic facts are, then, that Britain tried to reduce VAT on solar panels and other home energy improvements years ago, while still a member of the EU. The EU stopped us, but now, after we have left, it wants to copy our example. That is hardly a ringing endorsement for EU membership. Indeed, it reminds us of an underlying truth: that as members of the EU we had to obey high-prescriptive rules on VAT – and now we can set whatever rates we feel like.