VAT incorrectly charged on water bill for 10 years.

alfven_wave

Hello. I wonder if anyone can give me some advice? Thames water wrote to me last week to tell me that under new Ofwat guidance they have determined we are a "household" and not a "business". This is indeed correct - the property in quetion is our home, purchased from a developer 10 years ago - I have never run my own business. It turns out that Thames Water have had us registered as a business since we moved in, and as such have been charging us 20% VAT on our water bill. So, my question is:

a) can I claim back incorrectly charged VAT, and if so, for how many years back (I have all the bills),
b) if I can claim the VAT back, is Thames Water liable for paying it back, either as a credit to my account or as a cheque, or
c) can I claim the VAT back from HMRC?

I could kick myself that I didn't know VAT is only liable on business accounts (as there's a 5% VAT charge on energy I guess I'd assumed there would be similar on water), and I firmly believe Thames Water should have determined that we are a household we we set our account up back in 2006.

Any advice before I face the Thames Water hotline would be greatly appreciated,

Kind regards,

Rob.

Robin9

Is there a contact name/ number on the letter ?

alfven_wave

Yes, for their "Revenue contact centre". I just want to get all my ducks lined up before I phone them.

Rob.

Robin9

I don't think you will have any problem at all - this has been picked up on an audit. I am surprised the letter doesn't describe what the process is.

It all down to the supplier and I don't think you have to do anything. Certainly they should adjust your account for the last 6/7 years and probaly make a discretionary payment for the earlier years.

I (rather my predecessor) paid a wrong rate on an electricity account for a charity - paying 20% instead of 5%. I had to submit a VAT declaration form and in due course had over £5k credited to my account.

Cardew

Like most cases of incorrect charging, I believe the official position(statute of limitation) is that they are only liable for the last 6 years.

That period(6 years) is what water companies use if they have made a mistake on items like Surface Water Drainage. However there is a good chance that they will make a goodwill payment for the additional years.

Advice would be to be 'gentle' during the phone call. If no success take the matter to the Consumer Council for Water

alfven_wave

Thanks Robin9 and Cardew for the info/advice. 6 years out of 10 VAT back would be better than a kick in the teeth, so fingers crossed.

Rob.

McKneff

Good luck xx
Better than a slap around the chops with a wet haddock

Dont ask, I have no idea where that came from.... but sounded apt lol xx

ANNIE

Andy_WSM

McKneff wrote: »

Better than a slap around the chops with a wet haddock


ANNIE

Some people might enjoy that.

Not me...Obviously. :rotfl:

System

Cardew wrote: »

Like most cases of incorrect charging, I believe the official position(statute of limitation) is that they are only liable for the last 6 years.

That period(6 years) is what water companies use if they have made a mistake on items like Surface Water Drainage. However there is a good chance that they will make a goodwill payment for the additional years.

Advice would be to be 'gentle' during the phone call. If no success take the matter to the Consumer Council for Water

Your advice is usually spot on Cardew - however, as it is a tax not a credit/debit then I would have thought that repayment would be in full. Presumably, the Utility company will be reclaiming all the over paid VAT from HMRC - unless, that is, they have an obligation that limits repayment of over payments.

Cardew

Hengus wrote: »

Your advice is usually spot on Cardew - however, as it is a tax not a credit/debit then I would have thought that repayment would be in full. Presumably, the Utility company will be reclaiming all the over paid VAT from HMRC - unless, that is, they have an obligation that limits repayment of over payments.

You could well be correct.

However looking on the web it appears that the cap on refunds of VAT is standardised at 4 years; although doubtless there are zillions of exceptions!

In practice, given the way water companies are funded, any expenditure on refunds is a legitimate expense in the year that it is paid.

Ofwat had a ruling justifying water company refunds being 'time barred'. This is the position for Surface Water Drainage(SWD)* but the principle applies to any retrospective refund.

Why can't the surface water drainage rebate be backdated?


We think it’s right that companies should not pay rebates retrospectively past the current charging year. Surface water drainage costs have historically been shared between all customers. As a result of offering the rebate to those not connected, other customers must pay slightly higher charges to recover the total costs of surface water. If rebates were applied retrospectively therefore, this would mean corresponding retrospective increases in charges to connected customers, who had previously paid too little for the surface water drainage service. This would be neither practicable nor desirable. Companies must ensure that this information is included in the billing literature sent with the customer’s bill.

* On SWD Ofwat have relaxed their stance.