Is VAT on energy supplies only on usage amount

BBSpringer

Hello, I have rececently transfered over to Utiltiy Warehouse (mistake by the way) and pay £122.00 by direct debit each month towards my electricity bill.  However I have observed that I am being charged VAT on this amount and not my actual usage which is less than £70.00 per month.  When I spoke with the advisor she stated this is how all electricity companies bill and that I will get any refund at the end of the year but I am sure with my old energy provider I only was charged VAT on my usage.  Is this correct and even legal ???

MorningcoffeeIV

Yes - all correct and legal.

Your old provider did exactly the same.

EssexHebridean

Yes - they take the vat off the money incoming rather than charging it on the service. And no - it’s not how all energy companies do it. When my case against UW went to the Ombudsman the person I spoke with there said they found it very strange. 

Oh - and yes again, you’re right, going to UW was a mistake… 😆

double_dutchy

MorningcoffeeIV said:

Your old provider did exactly the same.

I doubt it. I've had at least 10 different energy providers over the years and not one of them did that - I've always been charged VAT on my usage (including standing charge)

RobM99

Why is UW "a mistake"?

MikeJXE

Not in my case either. OVO calculate the usage add the standing charge then the VAT. I'm reasonably sure we would pay less  if the £66/67 instead of being credited to your bank was credited to your bill the bill would be less. But thats another rip off

double_dutchy

MikeJXE said:

I'm reasonably sure we would pay less  if the £66/67 instead of being credited to your bank was credited to your bill the bill would be less. But thats another rip off

The £66/67 payments don't affect VAT, e.g. my supplier, Octopus, charges VAT as normal on the usage and then the £66/67 is deducted

BBSpringer

RobM99 terrible company look at the 1star ratings on Trust Pilot they are rising daily 

MikeJXE

double_dutchy said:

MikeJXE said:

I'm reasonably sure we would pay less  if the £66/67 instead of being credited to your bank was credited to your bill the bill would be less. But thats another rip off

The £66/67 payments don't affect VAT, e.g. my supplier, Octopus, charges VAT as normal on the usage and then the £66/67 is deducted

My supplier OVO has nothing to do with the £66/67 payment it's not even mentioned on the bill. It goes straight into my bank account thus This government is making more on the Vat by OVO not reducing my bill before VAT is added, like I have said many times on various threads we are being ripped off and that is not a labour voter saying it. 

PennineAcute

MikeJXE said:

double_dutchy said:

MikeJXE said:

I'm reasonably sure we would pay less  if the £66/67 instead of being credited to your bank was credited to your bill the bill would be less. But thats another rip off

The £66/67 payments don't affect VAT, e.g. my supplier, Octopus, charges VAT as normal on the usage and then the £66/67 is deducted

My supplier OVO has nothing to do with the £66/67 payment it's not even mentioned on the bill. It goes straight into my bank account thus This government is making more on the Vat by OVO not reducing my bill before VAT is added, like I have said many times on various threads we are being ripped off and that is not a labour voter saying it. 

Being pragmatic, the £66 and £67 from the Government is actually £62.86 + £3.14 VAT and £63.81 + £3.19 VAT.  You are not being ripped off.

alibean121

Don’t worry @MikeJXE you’re not missing out on anything receiving your energy support payment like that. I’m looking at some bills that have it credited instead of getting it in the bank and they include the specific line after it’s listed of VAT at 0%. It’s treated the same way as any of your payments would be ie not grossed up.

On the main point, I suppose it hinges on philosophically whether you think energy companies bill then customers pay or if customers pay then energy companies bill. The tax point is the earlier of the bill or payment date. That said, I’ve never seen an energy company do anything other than charge VAT on actual billed usage. I’m sure they’ve taken appropriate VAT advice…