Landlord charging 20% VAT on gas bill?

triplea35

My son is renting a part furnished small cottage attached to the owners home, business and other rented properties.

When he took the property he was told they they have a business account so would get a a favourable rate.

He mentioned to me that his gas bill seems quite high. Visiting yesterday I asked to see see his most recent bill .It was for a month issued by BG and was over £100. Previous bills had been estimated but this one the meter had been read, so may account for a higher bill. He has never seen a meter but presumes they are  all in one location for all the properties.

Having a quick look at the bill there was a £6 business discount but also a £8 standing charge.

His landlady has written the pre VAT total at the side of the page and added 20%!  My son says that this was explained to him that as it was deemed residential property it was subject to a higher rate of VAT. The printed bill shows VAT at 5%

To be clear though, my son has no issues with his landlady, she has been very accommodating, so is reluctant challenge her.
I am sure VAT is 5% on domestic use but is there a reason, ie being a rented property that the landlady charges 20% VAT?

MaryNB

She's wrong. Even if she's being charged at 20%, she can only charge the tenant for energy at 5% VAT.

https://www.citizensadvice.org.uk/consumer/energy/energy-supply/problems-with-your-energy-supply/what-your-landlord-can-charge-for-energy/

theartfullodger

Is landlord actually registered for vat?  Lookup quoted vat number and see what business is named.  If not exactly same as name of landlord on tenancy agreement then don't have to pay it.

E.g. if vat registration number is "Alice Smith property ltd" but name on tenancy is "Alice Smith" then I don't think it's legal to add vat.

But, ianal

princeofpounds

Reselling of electricity can only be done at or below the maximum resale price, which basically does not permit any profit whatsoever. Page 5 specifically addresses VAT.

https://www.ofgem.gov.uk/sites/default/files/docs/2005/10/11782-resaleupdateoct05_3.pdf

If they have been overcharged, they can claim the excess back via small claims court. 

I'm not sure if the LL gets into trouble with OFGEM or the police, but I have memory it may be an offence.

dimbo61

There are different Vat rates between Gas and Electric ?
Paying £100 a month in energy bills for a self contained cottage with the current energy costs !  is a good deal.
Does your Son want to unset the LL ?

canaldumidi

Just to rsise a related query: your son has never seen the meter. Does he know that the bill relates to a meter that relates soley to his cottage? Might the meter also be for supply to a neighboring part of this group of businesses and properties?

And how long has he been there? When he first moved in, I would have expected him to get a meter reading (ideally read it himself) or could he have been charged for gas used prior to his tenancy starting?

I assume electricity and water are by similar arrangements?

HampshireH

dimbo61 said:

There are different Vat rates between Gas and Electric ?
Paying £100 a month in energy bills for a self contained cottage with the current energy costs !  is a good deal.
Does your Son want to unset the LL ?

Is it? I live in a 2 bed house and don't pay £100 a month for 3 of us.

Surely that's very dependent on the type of heating and how efficient the property is.

If the landlord is over charging then it's not legal so it shouldn't be whether they want to upset the landlord but to ensure they are being treated fairly.

Of the landlord is putting a 15% uplift on the bills then in this current climate the OPs son is really being hard done by.

No difference in VAT on my gas and electric both are 5%

TripleH

dimbo61 said:

There are different Vat rates between Gas and Electric ?
Paying £100 a month in energy bills for a self contained cottage with the current energy costs !  is a good deal.
Does your Son want to unset the LL ?

No, but the VAT rate on domestic gas and electricity is 5%. The VAT rate on gas and electricity to businesses is 20%.

I can see what the landlord is doing and their thinking. I don't believe they are being underhand here, just not in possession of the full facts.

Triplea35, if you / your son finds the appropriate guidance on HMRC Website  maybe drop in for a friendly chat with the landlord?

RogerBareford

dimbo61 said:

There are different Vat rates between Gas and Electric ?
Paying £100 a month in energy bills for a self contained cottage with the current energy costs !  is a good deal.
Does your Son want to unset the LL ?

That's a bit of a generalised statement considering that you know nothing about the cottage energy wise.

My 4 Bedroom House on an Ofgem capped tariff had an energy bill of less than £100 last calendar month with actual readings, so without further information i would have say £100 for a cottage is not good at all.

triplea35

Thanks for all the replies.
I will encourage him to raise the matter with his landlady though I know he is the type who would rather not make a fuss. I just wanted to be sure before I encourage him to do so. 

dimbo61

As said by others when I was flamed I know nothing about the cottage or location of the property.
I have no idea about what type of heating or how energy efficient the property is.
Do you know the EPC rating ? A to E 
We have No idea about the rent this young man is paying for the self contained cottage either.
All guess work. 
What has he paid in previous month's ?
Business deals for Gas/Electric do not have the cap limit that ofgem have for residential properties