We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
VAT on road side charging - possibly dropping to 5% from 20%
Recent ruling in the tax First Tier Tribunal allows for VAT to be charged at 5%, the domestic rate, and not 20%.
https://www.accountingweb.co.uk/tax/hmrc-policy/va...
No doubt HMRC will want to appeal the ruling.
Comments
-
While I agree and have no doubt they will appeal the ruling, it will be hypocritical when they inevitably do - a big push to EV ownership, while simultaneously penalising anyone that can not install a home EV charger.
I expect the decision to appeal will be as simple as not wanting to lose the tax revenue.
I have an EV and have been using one for a few years now and I'm very positive about them, but this is probably single-handedly my biggest gripe (that and ICE vehicles parking in EV charging bays - but don't get me started on that!).
Charging at home on an EV tariff at the off peak rate usually costs anywhere between 5-10p/kWh (depending on your particular tariff). Let's say on average 7.5p kWh. How many miles you get per kWh depends on the car, temperature, driving mode, style, etc but lets say an average of 3 miles per kWh. That means each mile might cost around 2.5p. When I was driving a petrol car before, the cost per mile worked out to around 15p, meaning driving an EV could be seen to be about 1/6th of the cost per mile (or even more if you drive a real gas guzzler). Obviously there's more to the picture than this (EV charger installations aren't free, tax, etc) but let's keep it simple.
Comparatively, charging at most public chargers in my experience has been around 85p/kWh. That's over 11 times more than charging at home. It also means that I would be paying about twice as much per mile as I would have been using my previous petrol car.
Anyone that drives an EV knows unless you want to take out a second mortgage, you should do all you can to avoid public chargers, even if that means flintstone-ing it home. This isn't just the (usually ~17%) 'premium' you typically see charged at motorway services. I've seen these rates in car parks, hotels, etc. You can occasionally get lucky and see rates closer to 50p/kWh but certainly not common and usually a very slow charger that would charge your car over a day or two.
When I looked into why the eye-watering discrepancy between home EV rates and public EV rates, I saw mainly two reasons given. 1. a higher rate of VAT is levied on public chargers (as you mention) and 2. that the EV installers are keen to get a ROI on the installation as soon as possible (especially as technology is continually improving and their is a risk for them the chargers may be redundant in less than a decade). My problem with the second is much like the Dartford crossing, I am cynical that the unit rate would ever come down - even after the charger 'paid for itself'.
Good news nonetheless and a step in the right direction.
Know what you don't0 -
Unless I have read the article linked by UKNick incorrectly, there is no certainty that a change in the VAT rate for roadside charging from 20% to 5% would result in lower costs for consumers.
AIUI, the article refers to an operating company that operated roadside chargers, charging at a rate inclusive of VAT and only after the event did the operating company submit the revised VAT-return to challenge the imposition of the 20% rate and not the 5% rate. There was no indication that the operating company, if successful, would track down and make a refund to all the customers that paid the fee with the full 20% VAT applied and credit back the difference to 5% rate.
I also suspect that, given there have been carve-outs to the rules for reselling of electricity (which is not permitted to be at a profit by anyone other than electricity supply companies) that means the EV-charge point operating companies can make a profit on the electricity sold, then ultimately the same arguments used in that will very probably be applied in the case of the VAT treatment of the same. The rules in that case not only allow the operator to resell the electricity at a profit (usually not allowed) but also a definition that the EV is not a premises (which was one strand of the argument by the EV charge operator in the VAT article linked by UKNick).
https://www.eversheds-sutherland.com/en/united-kingdom/insights/selling-electricity-to-electric-vehicle-drivers
1 -
No you're not wrong there's no guarantee they'd pass it on, but then they weren't certain that they could apply the reduced rate. As it says in the article they originally "submitted its VAT returns on the basis that its supplies were standard rated" and then "later had a change of heart", so given the uncertainty, it wouldn't make sense to start proactively reducing prices or refunding customers, and you could say they might have been right to be cautious as HMRC "subsequently raised an assessment to claw the amount back".
I think hypothetically if they were able to successfully argue this and HMRC backed down and allowed them a reduced VAT rate (doubtful), then this would inevitably ripple through the industry. Of course, it will then be on the operators to decide whether they carry on charging high rates and enjoying much higher profits, or they pass the benefit on to consumers (or a bit of both). I'd hope 'market forces' and 'competition' would cause the latter, but I'm not naïve to what would likely happen in reality.
Plus I know virtually nothing about tax law, so my layman view is that if HMRC really wanted to charge the 20% rate on EV charger operators, but the current guidance could be argued as ambiguous, presumably they could just update the guidance as necessary to remove any ambiguity.
Know what you don't0 -
The supplier has successfully argued their case with HMRC, hence the First Tier Tax Tribunal ruling.
HMRC are allowed to appeal this to the next tier tax tribunal, the Upper Tier. If they lose there, they can appeal to the Court of Appeal and finally to the Supreme Court. However, it is very unlikely HMRC will appeal past the Upper Tribunal if they lose there. Google Jaffa cakes and VAT to show they know when they're beaten.
If they do pursue this and lose at all the stages the courts will have ruled this is what the law says. Therefore, HMRC can't just update their guidance to what they want. If HMRC want to change the 5% to 20%, they'll have petition Parliament change the law.
Will the reduced rate VAT be passed on to the end user? It does appear from the article customers were initially charged at 20% but the company then decided it should be 5% on their VAT return. I assume this had the effect of increasing the company's cost of sales profit and hence a higher CT liability. But, now they've won the ruling, will they pass the new rate onto their customers? I'd assume so once they, and other suppliers, see how far HMRC are prepared to appeal the ruling.
0 -
When we left the EU we were told that VAT on Gas and Electric would stop - still waiting - there is always yet another excuse for the delay
0 -
Was that written on the side of a bus by any chance?
0 -
The only reason we pay VAT on our Gas/Electric bills is it was a condition of joining laid down by Brussels.
There were many things we were forced into adopting things even though our own standards were far superior. One example - the reason we finished up with Mad Cow Disease was that during the feed manufacture process they heated the feed to a lower temperature so a farming friend told me.
0 -
May want to check your history.
VAT was introduced at 0% in 1973 on electricty and gas. The Conservatives increased VAT on electricity in 1994 from 0% to 8% with the intention of it going to the standard rate (17.5%) from the following year but were defeated on this and instead Labour reduced it to 5% in 1995.
EU didnt introduce it, but the EU rules meant that once it had been moved above 0% it could no longer be returned to 0% and once it had gone above 5% it could never go below it.
0 -
I believe the lowering of rendering temperatures happened as a result of rising oil prices in the 1970’s - and I thought BSE was also due to the UK food industry’s love of cannibalism / cheaping out on animal feed?
1 -
I believe the lowering of rendering temperatures happened as a result of rising oil prices in the 1970’s - and I thought BSE was also due to the UK food industry’s love of cannibalism / cheaping out on animal feed?
I went on a site visit to a feed mill back in the mid 80s (we made process control instrumentation) and had a look at the product.
The site foreman nearly had apoplexy- "Did you just TOUCH that?" "Go and scrub your hands straight away, you won't believe what goes into that!"
There was me used to feeding our pigeons (I'm a Proper Midlander) with handfuls of pigeon corn, I had no idea it was a virtual death sentence to handle chicken feed…
I want to go back to The Olden Days, when every single thing that I can think of was better.....
(except air quality and Medical Science
)0
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 355.6K Banking & Borrowing
- 254.8K Reduce Debt & Boost Income
- 456.1K Spending & Discounts
- 248.2K Work, Benefits & Business
- 605.8K Mortgages, Homes & Bills
- 179K Life & Family
- 263.6K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.7K Read-Only Boards