Holiday chalet - query on 20% VAT electricity standing charge by site owner.

TJM22

Hi, we have a leasehold, non-residential, holiday chalet on a managed site. The electricity usage is paid for by coin meter.

The site owner charges us 20% VAT on the standing charge which he bills annually along with the site rent/maintenance charge.

Is this correct? Shouldn't VAT on all "pass through" energy charges be at 5% VAT?

Another chalet owner on the site has queried it with the site owner several times but not yet had a reply.

I've web searched but can't find a similar situation.

Thanks.

Jyana

Here is a link to a pdf that I recently came across. It was on the government guidance page on the energy rebate, but is regarding the rules on energy reselling in general and contains examples on what resellers are and aren't allowed to charge for.

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

MattMattMattUK

TJM22 said:

Hi, we have a leasehold, non-residential, holiday chalet on a managed site. The electricity usage is paid for by coin meter.

The site owner charges us 20% VAT on the standing charge which he bills annually along with the site rent/maintenance charge.

Is this correct? Shouldn't VAT on all "pass through" energy charges be at 5% VAT?

Another chalet owner on the site has queried it with the site owner several times but not yet had a reply.

I've web searched but can't find a similar situation.

Thanks.

The standing charge that they charge you is unlikely to be a pass through but based on covering their costs of administration. 

ariarnia

MattMattMattUK said:

TJM22 said:

Hi, we have a leasehold, non-residential, holiday chalet on a managed site. The electricity usage is paid for by coin meter.

The site owner charges us 20% VAT on the standing charge which he bills annually along with the site rent/maintenance charge.

Is this correct? Shouldn't VAT on all "pass through" energy charges be at 5% VAT?

Another chalet owner on the site has queried it with the site owner several times but not yet had a reply.

I've web searched but can't find a similar situation.

Thanks.

The standing charge that they charge you is unlikely to be a pass through but based on covering their costs of administration. 

then should it be listed on the bill as vat or as an admin charge? 

razord

Business energy has VAT charged at 20% - only domestic supplies have the reduction to 5%

[Deleted User]

ariarnia said:

MattMattMattUK said:

TJM22 said:

Hi, we have a leasehold, non-residential, holiday chalet on a managed site. The electricity usage is paid for by coin meter.

The site owner charges us 20% VAT on the standing charge which he bills annually along with the site rent/maintenance charge.

Is this correct? Shouldn't VAT on all "pass through" energy charges be at 5% VAT?

Another chalet owner on the site has queried it with the site owner several times but not yet had a reply.

I've web searched but can't find a similar situation.

Thanks.

The standing charge that they charge you is unlikely to be a pass through but based on covering their costs of administration. 

then should it be listed on the bill as vat or as an admin charge? 

If it is "the standing charge" or "a standing charge" could be very different things.

If it is just specifically the suppliers standing charge, then it should be just 5% VAT regardless of what the site pays. (It's the yellow box in Jyana's link iirc)

DullGreyGuy

TJM22 said:

Is this correct? Shouldn't VAT on all "pass through" energy charges be at 5% VAT?

5% is the domestic rate, a holiday camp is a commercial enterprise and so ordinarily are charged 20% and so the pass through is 20%

[Deleted User]

DullGreyGuy said:

TJM22 said:

Is this correct? Shouldn't VAT on all "pass through" energy charges be at 5% VAT?

5% is the domestic rate, a holiday camp is a commercial enterprise and so ordinarily are charged 20% and so the pass through is 20%

OFGEM disagree with you.

TJM22

Thanks to all who have replied.

Deleted_User the yellow box does indeed seem to infer that that VAT rate is 5%.

The two paragraphs above it appear to say that they have to explain their calculations.

So, armed with the Ofgem, doc I will ask them directly as soon as I receive the bill for next year (they always send them out just after Xmas - just to keep us all merry - not).

Grandad2b

[Deleted User] said:

DullGreyGuy said:

TJM22 said:

Is this correct? Shouldn't VAT on all "pass through" energy charges be at 5% VAT?

5% is the domestic rate, a holiday camp is a commercial enterprise and so ordinarily are charged 20% and so the pass through is 20%

OFGEM disagree with you.

Doesn't that depend on whether the premises are residential or commercial? A room in a hotel would clearly be commercial, a residential park home would (i expect) be residential. A non-residential park home... someone will care enough to take it through the courts, one day.

[Deleted User]

Grandad2b said:

[Deleted User] said:

DullGreyGuy said:

TJM22 said:

Is this correct? Shouldn't VAT on all "pass through" energy charges be at 5% VAT?

5% is the domestic rate, a holiday camp is a commercial enterprise and so ordinarily are charged 20% and so the pass through is 20%

OFGEM disagree with you.

Doesn't that depend on whether the premises are residential or commercial? A room in a hotel would clearly be commercial, a residential park home would (i expect) be residential. A non-residential park home... someone will care enough to take it through the courts, one day.

I don't know.  Have never seen it tested and even OFGEM say "this is only our understanding, if you want more advice speak to HMRC".