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Established in 1981, MGi Ltd has become well-known for providing the best solutions for businesses in:

Refrigeration, Air-conditioning and Heating solutions.

We recognise that in all applications, maintaining the correct environment has far-reaching benefits.

These include lessened employee stress and more contented customers and staff.

It can also lead to enhanced productivity, improved services and in some instances increased profitability in the longer-term.

MGi Ltd:

• Design and install air conditioning systems for all types of Commercial, Industrial and Domestic environments.
• Provide a wide variety of refrigeration solutions including cold rooms, walk-in refrigerators and freezer rooms.
• Provide tailored maintenance services (PPM) to individual sites.
• All MGi’s engineers are F-Gas Certified to ensure total compliance for our clients to the new Government regulations.
• Provide a rapid-response service, available 24/7, for those unforeseen circumstances.

If you would like to learn more about McAlpine Grant Ilco please contact us here for further information.

MGi have earned their success by maintaining the standards of

• Quality
• Reliability
• Customer satisfaction

This is now the hallmark of the Company.

The main objectives of the regulations are to reduce emissions of
greenhouse gases used as a refrigerant.

Impact on your business

If you own refrigeration or air conditioning equipment operating
on R22 Refrigerant, we would strongly advise that you consider
reviewing your options in order to minimise the impact on your
organisation, both operationally and financially.

How can MGi Ltd help? 

We can help you with the planning by providing  a free,
no-obligation audit of your air conditioning and refrigeration
system(s) which will enable you to determine the most suitable
action to ensure that not only will your Company comply with the
legislation but also facilitate you in saving money through
significantly reduced energy costs.

The Enhanced Capital Allowance (ECA) scheme is a key part of the Government’s programme to manage climate change and, is designed to encourage businesses to invest in energy-saving equipment. The ECA scheme can bring significant financial savings, in the short and long-term, as well as improving a company’s energy efficiency and its impact on the environment.  

Reduce energy costs and Carbon Dioxide emissions

With rising energy prices and the growing demand to go green, many businesses are facing challenges in reducing their running costs while trying to achieve a smaller carbon footprint. It can often appear difficult knowing how to achieve energy savings without making sizeable investment or compromising ‘business as usual’ operations. There is an answer.

The Government’s Enhanced Capital Allowance (ECA) Scheme, managed by the Carbon Trust, is designed to encourage manufacturers to produce increasingly more efficient equipment. To qualify equipment must meet stringent energy levels set by the Carbon Trust (the top 15-20% of the market is their mark). End user companies are able to benefit by an accelerated tax relief.

Any partnership or business making a profit and paying (corporation) tax can benefit from the scheme to start making immediate cost savings and improve their environmental credentials.

Since April 2008 any loss making business is eligible to apply for a payable ECA (excludes partnerships). Providing their ECA purchase is less than their loss, they can claim a Payable ECA of 19% on the value of their purchase of qualifying equipment. See www.hmrc.gov.uk and search for ‘Payable ECA’.

How does it work?

The generally available Capital Allowance lets you deduct 25% of qualifying capital expenditure from pre tax profits. This is repeated on the 75% residue the following year and every year thereafter until the equipment is amortised. Normal Capital Allowance can therefore take many years to claim.

The ECA scheme provides businesses with 100% first year tax relief on their qualifying capital expenditure. This boosts cash flow, reduces borrowing, increases investment and over time is worth far more than normal capital allowance. An ECA qualifying air conditioning installation not only includes the equipment but also the design, transport, cranage, installation costs and commissioning. ECA of 100% of this total sum can be claimed against pre tax profits in the first year.

For example, if corporation tax is 30% then for every £1000 spent on the installation there will be a one off reduction in first year tax bill of £300.

For normal capital allowance this would be £75 in the first year, £56.25 in the second, £42.18 in the third and so on. This saving is also enhanced by the reduction in energy bills as it relates to lower energy use compared to less efficient equipment.

Why it pays to invest in energy efficiency

New technology will of course call on investment and more energy efficient products often command a premium. Opting for the cheapest option can appear to be the most cost effective choice, but choosing technologies to deliver immediate cost savings will often prove to be a false economy.

A higher value, but more energy efficient product will help to reduce energy costs, making it a more sound investment in the long term, as well as reduce Carbon Dioxide emissions. Qualification through the ECA scheme will make the product even more cost effective due to the accelerated tax relief available.

So what equipment should I be investing in?

All manner of products can deliver energy efficiencies, but to maximise investment it is important to select products that will deliver cost savings as well as improve your business.

Air conditioning is the perfect example. Even though air conditioning in businesses normally accounts for less than a third of annual energy bills (Carbon Trust report) improving energy efficiency in this area has the potential to lead to significant energy and cost savings.

The benefits don’t stop there. Modern air conditioning equipment can provide both cooling and heating making it more cost effective to upgrade and install than standard heating systems, as well as giving you greater control of your working environment.

What details are needed to claim ECA?

ECA can only be claimed on equipment that appears on the Energy Technology List (ETL). Due to the nature of this list, it is updated on a regular basis. For this reason added and removed dates can also be found at this website. This list can be found at www.eca.gov.uk/etl. The installation invoice will be the evidence needed by HMRC. This must show or be accompanied by a list of indoor and outdoor combinations which mirror the products in the Product name or VRF file.

The submission is made with the company/partnership tax return as advised by the company’s accountant.

Finding products on the ETL:
To find a list of qualifying heat pumps go to www.eca.gov.uk/etl

For more information about the ECA Scheme and the ETL, please visit www.eca.gov.uk/energy

Reducing carbon dioxide emissions

Reducing the rate of VAT on energy efficient products lowers the cost differential between air source heat pumps and conventional heating systems to the final customer. A dedicated air source heat pump is estimated to save in excess of two tonnes of carbon emissions per year, so the Government is applying the reduced rate VAT in this case to increase the demand for energy efficient heating systems at the expense of existing less efficient heating systems.

Who qualifies?

VAT has been reduced on all air source heat pumps through a change to the VAT Act 1994, in Statutory Instrument 2005 No. 726 which came into force on the 7th April 2005.  The reduced rate only applies to the supply and installation of air source heat pumps to buildings that are either:

* a) residential accommodation, or
* b) intended for use solely for a relevant charitable purpose.

An indication of the types of buildings that fall into these categories is listed below. Please note this list is not exhaustive. Exclusions and definitions do apply to both these categories and full details are in notice 708, Buildings and Construction, section 14.2, 14.6 and 14.7 respectively.

* Residential accommodation
In addition to a standard residential house or flat that consists of self-contained living accommodation, the following may also be eligible:

(a) a home or other institution providing residential accommodation for children,
(b) a home or other institution providing residential accommodation with personal care for persons in need of personal care by reason of old age, disablement, past or present dependence on alcohol or drugs or past or present mental disorder,
(c) a hospice,
(d) residential accommodation for students or school pupils,
(e) residential accommodation for members of any of the armed forces,
(f) a monastery, nunnery or similar establishment, or
(g) an institution which is the sole or main residence of at least 90 per cent of its residents.

* Intended for use solely for a relevant charitable purpose
‘Relevant Charitable Purpose’ means use by a charity in either or both of the following ways:

(a) otherwise than in the course or furtherance of business
(b) as a village hall or similarly in providing social or recreational facilities for a local community.

If you are unsure if your project would be included please contact HM Revenue and Customs Advice Service.

How it works

The VAT advice service has indicated that the equipment cost and installation cost for a qualifying project must be on the same invoice to benefit from the reduced rate of VAT.

Therefore, the contractor will purchase an air source heat pump at the standard rate VAT (15%), but will sell to the qualifying final customer at the reduced rate VAT (5%).

The value difference in Input (purchase) and Output (sales) VAT will be detailed on the contractor’s normal VAT return, and can be reclaimed accordingly. This means there is no financial implication for the contractor, and a significant cost benefit for the final customer.

If the contractor supplies an air source heat pump to a qualifying final customer but does not install it, then the standard rate VAT will apply.

Further information

If you require more detailed information on any of the areas mentioned in this release, the following HM Revenue and Customs publications may prove useful:

• Statutory Instrument 2005 No. 726
• Notice 708, Buildings & Construction
• Regulatory Impact Assessment (RIA) – Reduced rate of VAT on Air Source Heat Pumps and Micro Combined Heat and Power Units
• Value Added Tax Act 1994, Schedule 7A.

Details of all publications are available on the HMRC website. If you require further clarification or advice we recommend you contact HMRC Advice Service on: 0845 010 9000 or visit their website: www.hmrc.gov.uk

This article is intended for use as a guide to the main issues described. It is not intended to be a statement of law and customers should take legal advice as appropriate. MGi Ltd accept no responsibility for any errors or omissions.

For further information please refer to the following document:
HVCA Code of Fair Trading