VAT on energy bills

Radio01

Hi all. Looking for some advice. I’m currently renting a workshop that is a barn on a farm. I’m not sure if this classes as a commercial property rental but obviously I do use it to make products I sell. Anyway, I have just received my energy bill from the landlord/farmer, which is quite high. My first question is, I’m pretty sure he is only paying 5% VAT on his bills as it’s mixed commercial and residential dwelling. I recall seeing a bill last year that showed 5% VAT. He is charging me the full 20% VAT on my bill, should he be passing on the 5% reduction he gets to me? The bill is in his nameC I am in essence just paying it.

Next, and this is where it gets a bit fishy, I questioned him on the amount and asked to see a bill to see what tarif I am on and what I’m paying per KW. He doesn’t seem willing to show me the bills for some reason. He did send me his statement of account for the year and highlighted my bills, however I’m pretty sure the statement off account is showing what’s coming into and out of his account includes the vat he is paying, which he is then adding 20% vat onto, so even if he is within his rights to charge me the 20% vat, it seems like it’s on top of the 5% he’s paying. 

I guess the questions are, can he charge me the 20% vat or should he be passing on what he is paying, and am I within my rights to ask to see the bill before I pay to make sure I’m paying only for what I have used? 

Thanks

Radio01

Typed on my phone. Apologies for the typos 

MWT

From what you've posted so far, you do not have any of the usual resale price protection as you are renting commercial premises.

It would be hard to imagine any circumstances under which a workshop in a barn could ever be considered as anything other than 'commercial'.

Do you have a separate meter for your usage and are there any details about the power costs in your rental agreement?

The VAT question is more complex, but if your supply is separately metered it may well be attracting the full 20% rate, but obviously you should not be paying VAT on top of a figure that already includes VAT...

Radio01

Thanks for the reply. The unit is separately metered. So the bill will be for my unit alone. I’m assuming he can’t withhold the actual bill from me if I request it? At the moment all I have is a scrappy bit of hand written paper saying what He says I owe, and whenever I ask to see the actual bill, he evaded it or tells me I’m welcome to try and find another supplier myself, but will do anything not to show it to me. 

Im 99% sure he is paying the 5%. So there is the possibility I should be paying the 20% but he should obviously be deducting the 5% he’s paying first. 

MWT

What does your rental agreement say about the electricity?

Does the meter have its own MPAN or is it a private sub-meter?

Depending on your usage you may qualify for 5% VAT anyway, if the supply was in your name, so depending on the length of your rental agreement, you might want to take him up on his offer to find a cheaper supplier...

How much is he charging you per kWh and the standing charge?

Are there any other elements on the bill like the CCL?

Radio01

This is what I mean, it does not say the price per kw on the bill he gave me. It is literally a hand written piece of paper that says 

January - £114.07
Febuary - £165.54

and so on.

It’s the full year in 1 bill. This is the reason I asked to see the actual bill... and when he became sheepish, avoiding showing me at all costs. 

we don’t actually have a rental agreement, I was subletting (taking half of the unit) and had an agreement with the person I was subletting from. He had an agreement in place with the landlord and I had one with him. He then moved out and I said I would take over the full unit, but the landlord never asked me to sign another agreement.

i definitely won’t be eligible for the 5% vat reduction if I took it on myself sadly. it currently has 2x 3 phase cnc machines running all day. 

I believe the unit has its own MPAN. It’s definitely not a sub meter, it has its own supply and meter as the tenant before myself (and the person who I was sub letting from) was paying his own bill Direct to the electricity company. The person in the unit next door Informed me of this as he knew him quite well. 

Thanks again for your time in answering these

QrizB

Slightly random but are you VAT registered? If you are then it's a bit of a moot point, it will go into your VAT accounts and all come out in the wash.

Of course your landlord will need to giver you a proper VAT invoice which might prove the next stumbling block ...

*cough* https://www.gov.uk/report-vat-fraud *cough*

Radio01

Hi QrizB

I am Vat registered. But I was under the impression that you cannot claim back VAT for energy. When I “ask google” that is also the answer I get. 

With that in mind I would obviously rather pay the 5% if he should just be passing on what he pays. 

Also, I’m pretty sure he is charging me 20% vat on top of the 5% he pays. Which makes my bill instantly 5% more expensive. 

Lastly, if I ask to see the actual bill, surely he has to provide this as proof as to what I’ve actually used. At the moment it feels like he’s pulling numbers from thin air. The bill is £2,000 including the 20% vat he’s added (for the year)

MWT

This is all a bit of a mess really.

If you have no rental/lease agreement then your rights and protections are only those covered by statute and while you may have done enough to establish some limited security of tenure, there is nothing in the statutes that covers the supply of electricity for example, and nothing that requires him to provide any particular evidence for the charges.

If the meter is on site, do you not have sufficient access to at least take your own meter readings?

Similarly, if the amounts you are being billed are only around £100-200 a month, I would be so sure you wouldn't qualify for the reduced VAT rate of 5%.

QrizB

Radio01 said:

I am Vat registered. But I was under the impression that you cannot claim back VAT for energy. When I “ask google” that is also the answer I get.

OK, no worries, I've never run a VAT-registered business!

Were the numbers you posted above real? These ones:

Radio01 said:

January - £114.07
Febuary - £165.54

If those are typical prices for the full year it seems to me that you're likely to be using less than 1000kWh/month and should be paying the 5% de minimis VAT rate, not the full 20% rate.

Do you know where your meter is, and are you able to read it?

Edit: I was typing while MWT was, so apologies for duplicating much of their post.

Radio01

Thanks so much for the reply guys. Yes those numbers were real. Some go to around 200 per month others are 50 pound per month. It fluctuates but never more than that window. 

MWT, I agree it’s very messy, and a mess of my own creation. However, surely, not having an agreement dosnt give him carte blanche to charge me whatever he wishes without providing evidence? And the other side of the coin is he is as unprotected as I am? Meaning if I refuse to pay until he shows me the bill to prove what I owe and it ends up in court, eventually he will have to provide the bills? (Obviously I don’t want it to some to that)

thanks for the heads up regarding the vat reduction, I had no idea, I just assumed I would be over the threshold, annoyingly at the moment I cannot see how many kw I use per month to see if I would qualify as he will not share the bill. 

I probably could get to the meter to get readings. But without the bills to cross reference them, surely the numbers mean very little?