static caravan ground rent

lgys15653

hi sorry if this is posted in the wrong forum, got our new ground rent invoice this week £2191.67p plus £438.33 vat. the thing is our ground includes water rates & electric, water rates are charged at 0% in our home does this apply to static caravans & electric is charged at 5%. they say that it is what the government say, ground rent is charged at 20%, but what about water & electric where does the extra go? water rates this year are £270 so at 20% this would be £54 but seeing as water is not vat-able? where does it go????????? whats your ground rent include? & what do you pay for.the invoice come with just ground rent and vat no break down on what we are paying for, can i ask for a break down of what i am paying for? i have phoned the site office & asked them but was fobbed off, with the government says they have to charge vat on ground rent, which i agree, but not extra vat if its not going where it should do. the site owners have 5 site around me and are one of the bigger companies so i would say there is a extra £75 per caravan times this by about 2000 local caravans & it adds up to a pretty penny.this as only just happened this year with the water as it was separate before but the electric as being going on for years. any help would be appreciated

System

You are not paying extra VAT. You are paying the VAT on the ground rent which incorporates the cost of water, electricity & gas. They are not separate entries within the ground rent.

It's a bit like postage. On its own it is exempt. When it forms part of the overall cost of an item then VAT becomes payable at the standard rate

The VAT will go to where it should do I.E. the Government.

lgys15653

tks for that, but last year water was billed separate & vat not charged, now its been incorporated in the ground rent it is just seems funny.

lgys15653

and the energy company will bill them & charge them 5%?

wealdroam

lgys15653 wrote: »

and the energy company will bill them & charge them 5%?

Maybe.

But, as you say, they are effectively charging you 20% vat on electricity.

That does not mean that the site company pockets the difference.

The 'difference' goes to HMRC.

The site owners appear to be doing things correctly.

This HMRC webpage downloads a document that explains caravan site vat regulations.

In there it says...

4.2 The treatment of charges for electricity and gas
Providing you can identify the actual consumption of users (ie through metering at the individual pitch) you may account for VAT on supplies of electricity and gas to caravans at the reduced rate. If this is not possible, the liability must follow that of the main supply of the pitch rental.

and...

4.3 The treatment of charges for water and sewerage
Providing you can identify the actual consumption of users (ie through metering at the individual pitch), you may account for VAT on water and sewerage at the zero-rate. If this is not possible, the liability must follow that of the main supply of the pitch rental.

In other words, if the supply of water or electricity is metered, then vat can be charged at the zero or reduced rate. If the supply is not metered, then you must pay vat at the standard rate, i.e. 20%.

This change appears to have taken place from 1 January this year.