Should we be charged as domestic or business customer?

suered

Dear All

I live in a flat in a converted warehouse. Each flat is responsible for its own gas/elec as you would assume. BUT there are lights in the communal areas and the electricity for this is paid for out of our service charge with the customer listed as "Warehouse Co Ltd" (it's share of freehold so each flat owns one share in the company) and we are being charged business rates rather than domestic.

Do we have a case at all for being charged on residential rates - which I'm assuming would be cheaper?

Thanks

tripled

You are classed as a domestic user. Commercial rates are invariably cheaper than residential, however you will be paying 17.5% Vat instead of 5%. Importantly you have far fewer rights and can been disconnected much faster if the utility provider wants to. If the company identifies you are a residential customer they will probably transfer you to domestic energy even if you don't want to as they are obliged to give you the extra consumer protection.

suered

So even though the customer name is a company, we are still a domestic user? Then it comes down to comparing the difference between the rates for commercial/domestic and the amount of VAT being charged as to whether it would make sense to switch?

Sorry, if I'm being a bit slow on the uptake - only had the first of many coffees needed to jumpstart the brain

stewie_griffin

Communal areas such as stairwells etc are normally charged at business rates but this doesn't mean you'll have to pay 17.5% VAT. Businesses are charged 17.5% VAT unless they use less than 33 units per day on average over the billing period.

tripled

Sorry, I thought you meant your flat was listed as commercial as well as the stairwells!

jessc_2001

Just a quick question (or maybe 2!) - who actually pays the bill?

If you pay a service charge to a Management Company, and they pay the bill, then aren't they (the management company) the customer and therefore classified as 'Commercial' not 'Residential'?

Or is it classified according to what the supply is actually used for?

suered

Jessc - this is why I was wondering. The bill goes to "Our Big Building Co Ltd" - but the shareholders are the owners of the flats - i.e. the residents of the building - and the electricity is being used to light the communal areas of the building so that the residents can see where they're going.

So, on first glance, yes, it's a company that's paying it, but the money that's used to pay actually comes from the residents who are also the shareholders paying the service charge.

Stewie, so if we use on average less than 33 units a day for the communal areas (which has its own meter), we should only pay 5%?

Thanks again all
suered

tripled

If it's a business that's paying it and they are vat registered, then they would be claiming that vat back anyway. Even if they are not vat registered there is still a good chance it will be cheaper on the commercial tariff than domestic.

suered

Tripled, right, we'll keep quiet then. We did look into becoming VAT registered but apparently we're not allowed to.....

tripled

Best bet is just check on your first bill what the unit prices are, then go to someone like Ebico and see what their prices are and you should soon be able to work out if you can make a saving

anniecave

suered wrote:

.... , so if we use on average less than 33 units a day for the communal areas (which has its own meter), we should only pay 5%?

Thanks again all
suered

Yes. This is assuming it is classed a commercial supply. It is an electricity industry VAT rule.

And it is calculated on a daily average per billing period (quarter), so it's possible to be charged 5% during the summer months when the lights are off and 17.5% in the winter.

If it was classed as a residential supply all the VAT would be at 5% no matter how much was used.

Communal areas tend to be classed as commercial supplies anyway.