dudders
Member
- Location
- East Sussex
Some suppliers of heating oil and electricity, and perhaps gas too, are getting it wrong on the charging of VAT. I've had to get stroppy with two companies already this year, after they insisted on charging me 20% when it should have been 5%. They come round in the end, but it can mean a fight!
It should go like this:
1. The 'de minimis rule'
Any supply of heating oil, to domestic or commercial premises, is taxable at 5% if the delivery comes to 2300 litres or less. It's the delivery that matters, not the tank: put 2000 in one tank and 1000 in another and you'll be over the 2300 litres, if it all came in the one delivery.
Once the delivery is over 2300 litres, the VAT rate will stay at 5% if the fuel is for domestic use, but go up to 20% if it's for commercial use. That's for the whole lot, not just that part of it above 2300 litres.
2. The 'mixed use' rule
But I have one tank that feeds a boiler that heats several flats as well as several offices. This is known as 'mixed use' for the purposes of VAT. You have to apportion the use: if the domestic proportion is over 60% of the delivery, then the whole delivery is taxable at the reduced rate of 5%. All of it. If the domestic use is less than 60%, then the domestic portion is chargeable at 5% and the rest at 20%.
If you're claiming 'mixed use', your supplier has to provide you with a certification form that you fill in and return. On this, you will specify the size of the domestic proportion.
Some suppliers are confusing the 'de mimimis' rule with the 'mixed use' rule and charging 20% on any delivery over 2300 litres, no matter what it's being used for.
Exactly the same with electricity and gas. With electricity, you should see each meter with one supplier in the same way you see each oil tank filled in one delivery. So if you're on 3-phase, with 3 meters, all supplied by one company, it's the total supply to the 3 meters together that counts in the above calculations.
For electricity, the 'de minimis' rule applies to a supply of up to 33 kW hours per day, or 1000 per month. For gas, the rule applies to supplies of less than 15 therms per day, or 150 per month. But the rule on apportionment is the same for all heating fuels.
More info here: Fuel and Power, VAT Notice 701/19.
It should go like this:
1. The 'de minimis rule'
Any supply of heating oil, to domestic or commercial premises, is taxable at 5% if the delivery comes to 2300 litres or less. It's the delivery that matters, not the tank: put 2000 in one tank and 1000 in another and you'll be over the 2300 litres, if it all came in the one delivery.
Once the delivery is over 2300 litres, the VAT rate will stay at 5% if the fuel is for domestic use, but go up to 20% if it's for commercial use. That's for the whole lot, not just that part of it above 2300 litres.
2. The 'mixed use' rule
But I have one tank that feeds a boiler that heats several flats as well as several offices. This is known as 'mixed use' for the purposes of VAT. You have to apportion the use: if the domestic proportion is over 60% of the delivery, then the whole delivery is taxable at the reduced rate of 5%. All of it. If the domestic use is less than 60%, then the domestic portion is chargeable at 5% and the rest at 20%.
If you're claiming 'mixed use', your supplier has to provide you with a certification form that you fill in and return. On this, you will specify the size of the domestic proportion.
Some suppliers are confusing the 'de mimimis' rule with the 'mixed use' rule and charging 20% on any delivery over 2300 litres, no matter what it's being used for.
Exactly the same with electricity and gas. With electricity, you should see each meter with one supplier in the same way you see each oil tank filled in one delivery. So if you're on 3-phase, with 3 meters, all supplied by one company, it's the total supply to the 3 meters together that counts in the above calculations.
For electricity, the 'de minimis' rule applies to a supply of up to 33 kW hours per day, or 1000 per month. For gas, the rule applies to supplies of less than 15 therms per day, or 150 per month. But the rule on apportionment is the same for all heating fuels.
More info here: Fuel and Power, VAT Notice 701/19.
