VAT Question - meter rental, should it be charged at the higher rate?

marnstars

Hello

We have a static caravan with an annual rental on a card meter. Just noting that the VAT is being charged at 15% - is this correct? I've always been charged the higher rate, but the recent change to VAT has got me a thinking!!

Any help on this would be appreciated.

ex-energywatch_adviser

Who do you pay for rental and electricity usage?

If it is the owner of the park they cannot charge you 15% even if that is the rate that they are paying. They should also only be charging you the same unit cost that they are paying to the supplier.

See http://www.ofgem.gov.uk/Consumers/Documents1/1970-mrp.pdf

If you pay direct to a supplier, contact them and ask for a VAT Declaration form so the correct VAT rate can be applied.

All the above applies on the assumption that the supply is used for domestic purposes.

marnstars

ex-energywatch_adviser wrote: »

Who do you pay for rental and electricity usage?

If it is the owner of the park they cannot charge you 15% even if that is the rate that they are paying. They should also only be charging you the same unit cost that they are paying to the supplier.

See http://www.ofgem.gov.uk/Consumers/Documents1/1970-mrp.pdf

If you pay direct to a supplier, contact them and ask for a VAT Declaration form so the correct VAT rate can be applied.

All the above applies on the assumption that the supply is used for domestic purposes.

Good questions!

• We pay an annual rental for the card meter. I would assume therefore that the caravan site owns these? This is paid to the caravan site.
• We then pay for electricity on a payg basis through cards for the card meter. Again, bought from the site or the onsite shop (which is an independent shop leasing a property from the site).
• We don't deal direct with the supplier - the site owners have that agreement.

I'll read through what you have sent with interest. If you can offer any further guidance - then it's much appreciated. It sounds complicated!

ex-energywatch_adviser

The basic principle of maximum resale is that the reseller (in this case the site owner) cannot resell gas or electricity for more than they have paid for it. Irrespective of the VAT rate the owner pays they can only charge 5% VAT on any charges for energy supplied for domestic purposes.

The site will have a primary meter and each unit will have a sub meter supplied from it.

If the reseller, for example, is charged 10p per unit/kwh through the primary meter any sub meter used for domestic purposes can only be set for 10p + 5% VAT per unit/kwh.

Any standing charge should be divided by the number of meters supplied and either collected through the sub meter along with the unit price or as in your case, billed as an annual charge, Again any VAT applied can only be charged at 5%.

If the site owner is charging you the correct unit/kwh rate and the correct portion of the standing charge they should be happy to provide a copy of a recent bill to confirm what they are paying to the supplier but in any case they should not be applying 15% VAT to any charges made to you.

Unfortunately maximum resale is a civil matter and not covered by supply legislation so you would need to seek independent legal advice if you are being overcharged.

Premier_2

Could it be that the caravan park is classed as a business and is therefore procuring it's supplies through its primary meter at a rate that includes 15% VAT?

Edit: scrap that notion as the VAT on electricity units re-sold would be reclaimable as input tax by the site owner.

Looking again at the OP, this question appears to relate to the meter rental only, not the energy supplied.
As the meter is something the caravan site owner supplies & maintains for their customers, wouldn't if be correct to charge VAT at the standard rate (i.e. 15%) on such rental?

Edit 2: More info:

other

The reseller is not entitled to recover the costs of
running his or her own electricity or gas system
through the charges which are made for gas and
electricity. These are separate from the resale costs -
they are costs which the reseller incurs in
maintaining his property and administering his own
contracts with the purchasers. It is open to the
reseller to decide a basis for how these costs can be
recovered separately, for example as service charges
or as part of the accommodation charge itself. They
are not subject to maximum resale price, although
they may be subject to other limits, for example rent

controls....

http://www.ofgem.gov.uk/Consumers/Documents1/1970-mrp.pdf

marnstars

Gents - you've been great. Opened a minefield in my mind here and need obviously to take up with the site itself it would look.

I suppose in terms of my initial question, the site will have a meter and what we then rent from them is a sub-meter with card reader. This alone could be applicable to to 15% - but being fit for the purpose of supply of electricity, one would then think 5%.

Argghhhhhh!

bwngwll

This thread is exactly my problem ... briefly I own a static caravan in Wales and it is used for family holidays and weekends. Electricity is charged via a credit meter outside the van (ie each caravan is individually metered).
Site owner has just sent me a bill at 19 pence a unit, plus standing charge for a year at 20.00. This amounts to £536.61 for a year.
In rsponse to my query, 5the site owner has written back to say that the unit rate is 16.52 pence from Scottish Power, plus VAT at 15%, and the standing charge is the £140/month (!!!!) that he pays, divided over the 70 caravans on the site.
I think he is charging us way over the odds but don't know how to challenge this. Can I ask him to prove what he is paying to Scottish Power?
I emailed the VAT Office to ask them to confirm that lower rate VAT applies to electricity resale to caravans but have received no response.
Do I have to refuse to pay and make a counter offer?
What advice would you all give?

Bear in mind there are 69 others also being charged on a similar basis (I assume) so there's serious money here.

Premier_2

bwngwll wrote: »

...I think he is charging us way over the odds but don't know how to challenge this. Can I ask him to prove what he is paying to Scottish Power?...

You could ask him, but he is not obligated to disclose that information (afaik).

However, as you are customer of his and clearly feel upset by the charge, I would have thought if showing you a copy of the site's invoice from SP that verifies what amount charged pacifies his customer, there is no real reason to hide this from you.

The owner may not wish to do this in writing as he may not wish you to have a copy of his invoice, as he would then lose control of where it might then go, but arranging an appointment with him to view the invoice at his office may be possible.

Ask. What have you to lose?
If there is somethink like a 'van owners / residents committee, seeking this information through them may be the best way.


Regarding the price you are paying, I can't believe the turnover of the caravan site with 70 caravans is less than the VAT threshold, so the owner would/should be registered for VAT.

Therefore, you should be paying £16.52p per unit plus VAT.
Forget what VAT rate the owner has to pay; any that is resold or otherwise used wholly & exclusively for his own buisiness will have the VAT refunded by way of input tax. The owner should be charging you at £16.52 plus vat.
He will then need to account for such VAT to HMRC as output tax.

Cardew

bwngwll wrote: »

This thread is exactly my problem ... briefly I own a static caravan in Wales and it is used for family holidays and weekends. Electricity is charged via a credit meter outside the van (ie each caravan is individually metered).
Site owner has just sent me a bill at 19 pence a unit, plus standing charge for a year at 20.00. This amounts to £536.61 for a year.
In rsponse to my query, 5the site owner has written back to say that the unit rate is 16.52 pence from Scottish Power, plus VAT at 15%, and the standing charge is the £140/month (!!!!) that he pays, divided over the 70 caravans on the site.
I think he is charging us way over the odds but don't know how to challenge this. Can I ask him to prove what he is paying to Scottish Power?
I emailed the VAT Office to ask them to confirm that lower rate VAT applies to electricity resale to caravans but have received no response.
Do I have to refuse to pay and make a counter offer?
What advice would you all give?

Bear in mind there are 69 others also being charged on a similar basis (I assume) so there's serious money here.

It is illegal to re-sell gas/electricity at a profit; it is also my understanding that the VAT can only be 5% if for domestic properties - how static caravans are treated I do not know, but I assume as people live in them permanantly in some locations they would also be at 5% for VAT.

I also find it hard to believe that any tariff is 16.52p/kWh before VAT(other than the first few tier 1 units)

If he won't show you his invoices, I would go to the local Trading Standards Office to see if they can help.

Haarlem

I could not see where the following point has been covered in the replies.

The sub-meters owned by the site owner will more than likely be second hand bought after meter operators have finished with them.

Meters are certified measuring devices for the length of time they are certified for as being accurate.

If they look old check that they still certified. If they are outside the certification period satisfy yourself they are recording correctly.