VAT on fuel bills

matt_drummer

They are not charging any extra VAT.

They are just showing how the payments are comprised when they are eventually used against actual invoices.

They only VAT they pay to the government is 5% on the billed amounts.

In the end what you pay them will match the invoices and any over payments will be refunded.

They could show that any refund includes VAT at 5%.

If you pay them £105.00 per month then £105.00 per month is still credited to your account.

It is irrelevant if they say that each £105.00 includes £5.00 of VAT, you have still paid them £105.00.

If your bill for the month was only £52.50 (£50.00 plus VAT at 5%) then your account would be in credit by £52.50

If that happened to be your final bill then you would be refunded £52.50 which they could describe as £50.00 plus VAT.

In reality it is just £52.50 because the only VAT paid to the government was £2.50 on your bill.

You paid £5.00 in VAT and got refunded £2.50 in VAT meaning that you actually paid them £2.50 in VAT, exactly what they paid to the government.

There is nothing wrong with it but it is an unusual way of breaking down a payment on account.

I hope that makes sense.


And btw, I am an accountant.

[Deleted User]

matt_drummer said:

They are not charging any extra VAT.

They are just showing how the payments are comprised when they are eventually used against actual invoices.

They only VAT they pay to the government is 5% on the billed amounts.

In the end what you pay them will match the invoices and any over payments will be refunded.

They could show that any refund includes VAT at 5%.

If you pay them £105.00 per month then £105.00 per month is still credited to your account.

It is irrelevant if they say that each £105.00 includes £5.00 of VAT, you have still paid them £105.00.

If your bill for the month was only £52.50 (£50.00 plus VAT at 5%) then your account would be in credit by £52.50

If that happened to be your final bill then you would be refunded £52.50 which they could describe as £50.00 plus VAT.

In reality it is just £52.50 because the only VAT paid to the government was £2.50 on your bill.

You paid £5.00 in VAT and got refunded £2.50 in VAT meaning that you actually paid them £2.50 in VAT, exactly what they paid to the government.

There is nothing wrong with it but it is an unusual way of breaking down a payment on account.

I hope that makes sense.


And btw, I am an accountant.

I am not an accountant and I confess that I haven’t understood much of what you have posted. I do though have a daughter who is a FCA and Chief Accountant at an international insurance company: I shall ask her for a ‘ VAT for Dummies’ explanation. As VAT is only payable on goods and services why would any company would to make things even more complicated for the customer? 

Gerry1

[Deleted User] said: by

matt_drummer said:

They are not charging any extra VAT.

They are just showing how the payments are comprised when they are eventually used against actual invoices.

They only VAT they pay to the government is 5% on the billed amounts.

In the end what you pay them will match the invoices and any over payments will be refunded.

They could show that any refund includes VAT at 5%.

If you pay them £105.00 per month then £105.00 per month is still credited to your account.

It is irrelevant if they say that each £105.00 includes £5.00 of VAT, you have still paid them £105.00.

If your bill for the month was only £52.50 (£50.00 plus VAT at 5%) then your account would be in credit by £52.50

If that happened to be your final bill then you would be refunded £52.50 which they could describe as £50.00 plus VAT.

In reality it is just £52.50 because the only VAT paid to the government was £2.50 on your bill.

You paid £5.00 in VAT and got refunded £2.50 in VAT meaning that you actually paid them £2.50 in VAT, exactly what they paid to the government.

There is nothing wrong with it but it is an unusual way of breaking down a payment on account.

I hope that makes sense.


And btw, I am an accountant.

...why would any company would to make things even more complicated for the customer? 

Confusion Marketing, to make price comparisons difficult?

matt_drummer

[Deleted User] said:

matt_drummer said:

They are not charging any extra VAT.

They are just showing how the payments are comprised when they are eventually used against actual invoices.

They only VAT they pay to the government is 5% on the billed amounts.

In the end what you pay them will match the invoices and any over payments will be refunded.

They could show that any refund includes VAT at 5%.

If you pay them £105.00 per month then £105.00 per month is still credited to your account.

It is irrelevant if they say that each £105.00 includes £5.00 of VAT, you have still paid them £105.00.

If your bill for the month was only £52.50 (£50.00 plus VAT at 5%) then your account would be in credit by £52.50

If that happened to be your final bill then you would be refunded £52.50 which they could describe as £50.00 plus VAT.

In reality it is just £52.50 because the only VAT paid to the government was £2.50 on your bill.

You paid £5.00 in VAT and got refunded £2.50 in VAT meaning that you actually paid them £2.50 in VAT, exactly what they paid to the government.

There is nothing wrong with it but it is an unusual way of breaking down a payment on account.

I hope that makes sense.


And btw, I am an accountant.

I am not an accountant and I confess that I haven’t understood much of what you have posted. I do though have a daughter who is a FCA and Chief Accountant at an international insurance company: I shall ask her for a ‘ VAT for Dummies’ explanation. As VAT is only payable on goods and services why would any company would to make things even more complicated for the customer? 

The jist of it is that they are just showing how much VAT is included in what you pay them.

In the end the payments and the bills match up so you have only ever paid VAT at 5% on your bill.

What you pay them is what you pay them.

If you paid them £105.00 then they would apply £105.00 to your account.

They do not take £105.00 from you and only credit £100.00 to your account.

They are not gaining anything and the customer is not losing anything

matt_drummer

Gerry1 said:

Confusion Marketing, to make price comparisons difficult?

Breaking down the payments made against the account has no affect on the rates the supplier charges and therefore price comparison is unaffected.

ArbitraryRandom

matt_drummer said:

Gerry1 said:

Confusion Marketing, to make price comparisons difficult?

Breaking down the payments made against the account has no affect on the rates the supplier charges and therefore price comparison is unaffected.

But for anyone reading this it is definitely worth checking if the rates you are comparing include VAT or not - especially if comparing between suppliers where one might quote inclusive of VAT and others exclusive. 

Recently I noticed this when comparing between my existing rate (listed on my account with VAT) and other available rates (with the same supplier) which don't. 

[Deleted User]

ArbitraryRandom said:

matt_drummer said:

Gerry1 said:

Confusion Marketing, to make price comparisons difficult?

Breaking down the payments made against the account has no affect on the rates the supplier charges and therefore price comparison is unaffected.

But for anyone reading this it is definitely worth checking if the rates you are comparing include VAT or not - especially if comparing between suppliers where one might quote inclusive of VAT and others exclusive. 

Recently I noticed this when comparing between my existing rate (listed on my account with VAT) and other available rates (with the same supplier) which don't. 

In the ‘olden days’ price comparison websites always used VAT inclusive prices whereas suppliers, for accounting reasons, tend to default to ex VAT.

Mike1930

I am also have trouble with VAT on UW's invoices.  

I joined in October and paid a fixed amount of £87 by direct debit.  This is shown as £82.86 plus £4.14 VAT.  The invoice shows no electric charged but they only creditted my account with the £82.86 showing I am in credit by that amount.  

I am thinking I should have a credit balance of the £87 I paid.

QrizB

Mike1930 said:

I am thinking I should have a credit balance of the £87 I paid.

That's not how UW's accounting system works, though. Your credit is shown as an ex-VAT value.
Edit: as has been pointed out to you by more than one person in your own thread on the same subject.

Gerry1

Mike1930 said:

I am also have trouble with VAT on UW's invoices.  

I joined in October and paid a fixed amount of £87 by direct debit.  This is shown as £82.86 plus £4.14 VAT.  The invoice shows no electric charged but they only creditted my account with the £82.86 showing I am in credit by that amount.  

I am thinking I should have a credit balance of the £87 I paid.

No.  Your bill will show the ex-VAT price and that will be that, nothing more will be added.  There's no VAT to be added because you've already paid it.

However, (ignoring standing charges for a moment) if you cancelled right now and you'd used no electricity, you'd be refunded £82.86 plus £4.14 VAT.

In effect you're just paying the VAT in advance when the DD is collected rather than having it nibbled away bit by bit on each subsequent bill.  It all comes out in the wash.