Conservative Eurosceptics are to weld forces with Labour to try and defeat the government over changes to VAT on institution insulation and renewable energy.
At least 12 Tories are backing a Dwell on motion opposing any rise in VAT charged on solar nels, wind turbines, breath of air installation and energy-saving devices.
The current 5% rate id by forward claimants over 60 was ruled illegal by the European Court of Fairness in June.
It is one of several tax rows in the spotlight ahead of the EU referendum.
In the wake of Wednesday’s Budget, UK officials said EU leaders had go together a deal to allow the UK to scrap the so-called “tampon tax”, the 5% VAT fee on women’s sanitary products which cam igners have long deficiency to reduce to zero.
The European Commission is set to publish proposals next week on occasion member states more flexibility over VAT rates.
Eurosceptics maintain long been critical of rules in force since the early 1990s harmonising VAT counts across the EU, arguing they undermine national sovereignty and the right of fellow states to set their own tax rates.
The UK and other EU members cannot levy exchanges tax at less than the standard 15% rate except on specified ingredients. For these approved products and services, countries have the scope to sally VAT at a reduced rate of no less than 5%.
The UK has long applied a 5% assess to the installation of domestic energy-saving products for anyone over the age of 60 who is laid off, disabled or claiming benefits such as income support or housing service perquisites.
But last year, the European Court of Justice said this was a alienation of EU laws as the products and services concerned did not fall within the VAT directive which at best exempts the “provision, construction, renovation and alteration of housing as rt of common policy” and the “renovation and re iring of private dwellings”.
The UK has yet to decide how to respond to the ukase although it face financial penalties if it does not abide by the judgement.
Swot says VAT could rise to at least 15% as early as August unless the chancellor yields immediate action.
The opposition, which has been critical of cuts to solar and renewable financings, has tabled an amendment to the Finance Bill “empowering” George Osborne to set a zero evaluation in any cases on insulation and renewable materials or, alternatively, to compensate the industry for the financial bump that any VAT rise would have on jobs and investment.
Labour’s shield energy and climate change secretary Lisa Nandy said the “solar tax” desire “destroy thousands of jobs”.
“Reversing it is well within the chancellor’s power. He be compelled act to protect this important British industry.”
Labour’s change, expected to come to a vote on Tuesday, has won the support of a dozen Tories who are dejected about EU control over UK tax rates and seeking to highlight the issue in the run-up to June’s EU referendum.
Those money it include former ministers Tim Loughton and Peter Lilley and Graham Brady, moderator of the influential 1922 committee of backbench Conservatives – all of whom want the UK to do a disappearing act the EU.
ul Scully, the MP for Sutton and Cheam who is backing EU exit, told the BBC’s Ordinary Politics the situation was “absolutely outrageous” and he was “seriously considering” voting with Workers.
“At the end of the day this should be a UK-made decision,” he said.
“You have a berth where we can look at a sugar tax, where we penalising people for doing something the oversight does not believe is right, but we can’t reward the government for doing something we expect is the right thing to do.”
If the SNP and the Lib Dems also support the amendment, the government could be at hazard of defeat as it only has a working majority of 17 in the House of Commons.