20% or 5% VAT on Electricity

Jboy24

Hi,

I have been looking at my fathers electricity bills and have noticed that our farmhouse is being charged at 20% by Npower which is 100% domestic. I have looked our records and they have been doing this since time began ( 15 years minimum and yes my father hasn't changed provider since then and yes I have switched today). I believe that the amount of VAT should be 5% for a domestic property, Is this correct? We have a separate meter for our farm business supply so there is no question over where the energy is being used. Can I get the difference back of Npower?

firefox1956

As far as I am aware domestic electric is charged at 5% VAT
I would ring or email NPower & see what they say.
Be a nice windfall if you can get the difference back !!
HTH

dogshome

I assume the Farm buildings are on a Business supply contract and pay VAT at 20%

However, if the farmhouse is purely domestic with it's own meter, and importantly, the Local Authority recognise this by chargeing Council Tax as a domestic dwelling, the answer is YES it should be on a domestic utility tariff.

You need to contact n'power in WRITING heading the letter Complaint, enclosing copies of the Council Tax Bills for the last 6 years - 6 years is the maximum time the law allows for historic billing adjustments

I guess the n'power account is in your fathers name, so if you are going to write in your own name you will need to enclose a note from your father to n'power, authorising you to manage the account on his behalf

Rubidium

How many kWh's is being consumed on the domestic supply?

The reduced rate is for an average rate up to 33kWh per day - 1000 kWh per month.

See here section 5

Richie-from-the-Boro

Specialist [I assume] advice required from a farming VAT expert where the dwelling is still an integral part of the farm business itself.

Jboy24

Hi all and thanks for the input. The farm business hasn't actually been active as such since 1998. We leased the land out and the buildings. The house is purely domestic and doesnt form an integral part of the farm business. Yes we have council tax bills showing the status of the house. Whats really confusing is if I go further back they were charging the VAT correctly???!
I just worked out the difference in VAT and it looks to be about £1000 a year. (yes its a big house, old and electric heated on a tariff that hasnt been changed since MEB was around).

Jboy24

anyway even our farm business supply is well below 33kwh / day

Bluebirdman_of_Alcathays

Something isn't adding up here. If the difference between 120% and 105% is £1k, then that makes 100% £6,666.


I accept that there are regional pricing variations, and various combinations of E7 vs Standard metering, but I make that at least 35,000 KWh per year, and well north of 33 KWh a day. I used a very expensive PAYG tariff to get that - you'd probably need to use more like 50,000 KWh to spend £6,666 net and £8k gross.


It's been some time since I've worked in Business Energy, but IIRC if the consumer is using huge amounts, they can be shifted onto a business tariff without the consumers consent.

btr30

If the property is using more than 33kWh or 1000 kWh per month then it will incur a VAT rate of 20%.
However, if the use is sole domestic a VAT declaration form to this effect should be sent to the supplier to ensure VAT is charged at 5%.
I don't know how far back you can retrospectively claim, but best to contact your supplier for a declaration form. This may be required to be submitted annually and/or on change of supplier.

Jboy24

You would hope it didnt add up but I am correct. I said about £1000 its actually on average around £830. They were charging nearly 25p/kwh day and just shy of 10p/kwh night and three times the new contracted standard charge that I have agreed with SP. Plus of course they are incorrectly charging the environmental charge applied to business onto our home.
I called Uswitch and have saved my parents £2793.00 a year based on last years usage. The guy I spoke to at Uswitch said its the biggest reduction in cost for a home he had seen in 4 years !!!
I think this borderlines on fraud / morally irresponsible on the energy supplier.

Jboy24

I see someone mentioned 6 years being the maximum. If the energy company has knowingly been charging the farm house at the incorrect rate they should refund all of it??