business overchg by edf their error (£4k!)

fc123

HI, we have owned a shop for nearly 10 yrs.
It has ALWAYS been a commercial premises.
Please don't think I am stupid! But we have never switched elec suppliers and we usually paid estimated bills. I am now a committed MSE / DFWer and looked at our neighbours bill (prior to contacting uswitch)
and also realised our tariff was much higher.



I 'phoned EDF today with a meter reading that didn't tally up with the last estimated one though we had a meter reading in Sept by a "meterman". His reading was discarded as an error but it WAS correct.
Our current reading is 65928, on the last est bill of Oct 07 it was 86696.
I then complained about our tarrif as we pay 13.550p for 1st 173 units then 9.300p thereafter. Our neighbour (in identical premises) pays 4.260p per unit BUT does have a daily chg and a Climate Change Levy.

The edf lady said we were on a domestic tarrif by accident and they would change it to a business one which would be cheaper, however I pushed it and she told me they would backdate any overpayment (due to wrong tarrif) plus we are owed around 20,000 units.

As i am now an MSEer, I understand about compound interest etc (after doing bank chg reclaiming).

Can I ask them to add court rate interest of 8% to this overpayment ; ie; the domestic tarriff / business tarrif issue (i don't think I could work out or push for compounded!) as we were giving them money due to their error and so, couldn't use it in our business?
She also said they would sign me up to a new contract at the same time as sorting out the refund BUT I want to change to another provider as Uswitch found me one who will cost us approx £380pa. But I don't want to rock the boat.
Could someone give me some pointers for the letter I need to send them please?
I have to send a rates bill proving address is business and explain the situation. They did say they will ONLY backdate 6 yrs though.
I have done a few rough sums based on our usage and think we could be owed around £3500 - £4000!!!

Thanks for your time:D

fc123

Hi, I posted this but got no response......however EDF are sending someone out to read meter on Friday 18th. Nice lady said she will chase up overpayment on meter reading.

However, she said that I have been charged LESS as it was on a domestic tarrif. The business "rolling" tarrif is more exp. As I hadn't signed up to their 12 month deals like our neighhbour.
My arguement is I didn't know about the offers as I hadn't received the ad mail shots.

I KNOW...STUPID ME!!! Staying with an ordinary elec bill like in the olden days!

She replied "No, because you are down as a domestic customer" :wall:

Am I dealing with is in the best way??

Terrylw1

Hi,

I think you are extremely lucky if you are getting a refund out of this, many consumers end up with a massive bill from this happening.

Ok, the reading part is simple - get the guy to take the reading and then you keep a copy. Suppliers don't take meter readers as gospel so if they see a massive jump or a negative reading they ignore it. Usually then they will send you a letter asking for a reading and if yours matches, they will change it knowing that 2 sources have confirmed it. They may also check the meter number just in case.

Remember that if you are being backbilled for 6 years, the rate might not be fixed. They may recalculate on todays prices or may generate your prices including any price changes over the 6 years.

They may give you some compensation but they won't pay you interest IMO. The reason I say this is - you have had 6 years of bills and have also had 6 years to inform them (as they have had 6 years to bill you on the business tariff)

Is your bill in your name, not the shops? If so, they are less at fault as they cannot see you are business. The sales agent should have set you up as business though, so there is a mistake there.

Bare in mind that business contracts are fixed term deals so you won't be able to switch for years. I suggest you speak to them about this to see what can be done. There is nothing stopping you agreeing they charge you X business rate and you switch to someone else. if they agree to no contract where they have been notified of a change of supply (I've done this for customers in your situation before) They then send you a final bill based on their business rates.

Yes, rolling or "out of contract" rates as they are known are much higher. There are press articles on the web about small firms getting shafted here. You need to be very careful towards the end of your contract as you have to switch or resign to get favourable rates. Business customers also have less rights in terms of consumer protection than a domestic but you have a written contract that your could have checked by a solicitor as many firms have.

Also, remember that if you use over 34 units per day you pay VAT at 17.5% and Climate Change Levy. Have you included this in your calculations? You will have paid 5% VAT as a domestic.

So, they have been paying your VAT incorrectly which you are also liable to ensure if paid at the correct rate. If you use under 34 units per day though, you would be ok on 5%.

If you are a charity, do they have a VAT/CCL declaration off you as you only pay 5% tax as well then?

fc123

Terrylw1 wrote: »

Hi,

I think you are extremely lucky if you are getting a refund out of this, many consumers end up with a massive bill from this happening.

Ok, the reading part is simple - get the guy to take the reading and then you keep a copy. Suppliers don't take meter readers as gospel so if they see a massive jump or a negative reading they ignore it. Usually then they will send you a letter asking for a reading and if yours matches, they will change it knowing that 2 sources have confirmed it. They may also check the meter number just in case.

Remember that if you are being backbilled for 6 years, the rate might not be fixed. They may recalculate on todays prices or may generate your prices including any price changes over the 6 years.

They may give you some compensation but they won't pay you interest IMO. The reason I say this is - you have had 6 years of bills and have also had 6 years to inform them (as they have had 6 years to bill you on the business tariff)

Is your bill in your name, not the shops? If so, they are less at fault as they cannot see you are business. The sales agent should have set you up as business though, so there is a mistake there.

Bare in mind that business contracts are fixed term deals so you won't be able to switch for years. I suggest you speak to them about this to see what can be done. There is nothing stopping you agreeing they charge you X business rate and you switch to someone else. if they agree to no contract where they have been notified of a change of supply (I've done this for customers in your situation before) They then send you a final bill based on their business rates.

Yes, rolling or "out of contract" rates as they are known are much higher. There are press articles on the web about small firms getting shafted here. You need to be very careful towards the end of your contract as you have to switch or resign to get favourable rates. Business customers also have less rights in terms of consumer protection than a domestic but you have a written contract that your could have checked by a solicitor as many firms have.

Also, remember that if you use over 34 units per day you pay VAT at 17.5% and Climate Change Levy. Have you included this in your calculations? You will have paid 5% VAT as a domestic.

So, they have been paying your VAT incorrectly which you are also liable to ensure if paid at the correct rate. If you use under 34 units per day though, you would be ok on 5%.

If you are a charity, do they have a VAT/CCL declaration off you as you only pay 5% tax as well then?

Thanks for taking the time to reply!!

Bill is in business name.

I cannot remember when the electricity provider change...we started out with See board (I think) 10 years ago and it became EDF some years back. The bill just said Standard electricity tarrif on it...nothing clear about not being business. WE informed them of being a business 10 years ago and didn't think we had to check our status with them again.

None of the accountants used for doing VAT ever noticed the 5% VAT either.
Of course, NOW I see it clearly!!

I think we use more than 34 units a day in the winter.

The lady I spoke to said that they could not back date an undercharge to us.

Is this going to be nightmare? I have only grasped the concept of switching / 12 month utility contracts etc.....we were just doing things in an old fashioned way.

Thanks for the reply. ..the refund of the 20,000 units is being sorted out for us after the reading on Friday...she said as much to me yesterday.

Cardew

I am a little surprised that having been charged for a domestic tariff instead of a business tariff, they are going to refund you anything from the 20,000 units at this time.

You will owe back VAT. They will doubtless try to say you should have been charged a lot more for a business tariff etc etc.

Terrylw1

fc123 wrote: »

Thanks for taking the time to reply!!

Bill is in business name.

I cannot remember when the electricity provider change...we started out with See board (I think) 10 years ago and it became EDF some years back. The bill just said Standard electricity tarrif on it...nothing clear about not being business. WE informed them of being a business 10 years ago and didn't think we had to check our status with them again.

None of the accountants used for doing VAT ever noticed the 5% VAT either.
Of course, NOW I see it clearly!!

I think we use more than 34 units a day in the winter.

The lady I spoke to said that they could not back date an undercharge to us.

Is this going to be nightmare? I have only grasped the concept of switching / 12 month utility contracts etc.....we were just doing things in an old fashioned way.

Thanks for the reply. ..the refund of the 20,000 units is being sorted out for us after the reading on Friday...she said as much to me yesterday.

No probs. You are one of the many customers who will have experienced this due to issues around privatisation. I can tell you that there are Suppliers out there that have billed customers this way and still do.

Suppliers often compare data in terms of codes & tariffs and don't look at customer names. So, unless the customer or an advisor take the time to spot it - it can go on for a long time.

Glad they have sorted you readings, they have to do that regardless of th other issues. However, in order to resolve it they will need to produce a bill. At this stage, the bill should be produced against the domestic rate just to get it correct (or they could end up chasing you for payment for a bill that is incorrect)

As far as VAT back charging goes, I'm not sure. However, the Supplier has the ability to bill you for the last 6 years as a business (it's 8 I think in Scotland???) so they will be able to collect the tax & CCL as well. To backbill they have to replace all your bills, so they will work out the extra VAT & CCL and represent it on the bill. They have to or they are liable to HMRC for undercharging tax.

Your accountants should have easily spotted this, it's been around for years CCL came in after 2000 (can't remember the exact year) so any accountant will be aware of those changes, they were well covered in the press for a start. Suppliers had to send out info about it to their business customers for a start. Your Supplier will use the argument of "you are personally responsible for this a a business etc etc" however they seem to have been quite helpful so far.

So, I can understand from the point of view of a small business in not spotting that as you may have left it to the accountant since you only pay the 17.5% & CCL where you use over 34 units per day. If you use 34 units per day here and there, your tax will be calculated to accomodate this. When you slip back under the threshold you go back to 5% with no CCL. Thats all for elec though, I'm not sure on the gas side.

I think you need to haggle a bit here. They will want you to sign a new contract which will lock you in. I think you need to stress to them that you are looking to switch and consequently cannot sign a lock in. I wonder if you could sign a retrospective contract?

jhp

You might find this sticky in the Small Biz Forum, helps get you a decent biz energy contract .

http://forums.moneysavingexpert.com/showthread.html?t=49333

fc123

Terrylw1 wrote: »

Glad they have sorted you readings, they have to do that regardless of th other issues. However, in order to resolve it they will need to produce a bill. At this stage, the bill should be produced against the domestic rate just to get it correct (or they could end up chasing you for payment for a bill that is incorrect) They agreed this on the 'phone and I did put it in my letter.

As far as VAT back charging goes, I'm not sure. However, the Supplier has the ability to bill you for the last 6 years as a business (it's 8 I think in Scotland???) so they will be able to collect the tax & CCL as well. To backbill they have to replace all your bills, so they will work out the extra VAT & CCL and represent it on the bill. They have to or they are liable to HMRC for undercharging tax. I can sort this out on the next VAT return.

Your accountants should have easily spotted this, they were useless...do my own VAT day to day book keeping now.etc it's been around for years CCL came in after 2000 (can't remember the exact year) so any accountant will be aware of those changes, they were well covered in the press for a start. Suppliers had to send out info about it to their business customers for a start. Your Supplier will use the argument of "you are personally responsible for this a a business etc etc" however they seem to have been quite helpful so far.
They seemed to have taken on board that it is an error.

So, I can understand from the point of view of a small business in not spotting that as you may have left it to the accountant since you only pay the 17.5% & CCL where you use over 34 units per day. If you use 34 units per day here and there, your tax will be calculated to accomodate this. When you slip back under the threshold you go back to 5% with no CCL. Thats all for elec though, I'm not sure on the gas side.No gas!!

I think you need to haggle a bit here. They will want you to sign a new contract which will lock you in. I think you need to stress to them that you are looking to switch and consequently cannot sign a lock in. I wonder if you could sign a retrospective contract? I am going to memorise that phrase for the next 'phone call!! I have a new quote from another company....it was going through the switch process and going through the bills properly that showed up this error.

Thanks so much for the help!!!:D

fc123

Cardew wrote: »

I am a little surprised that having been charged for a domestic tariff instead of a business tariff, they are going to refund you anything from the 20,000 units at this time.

You will owe back VAT. They will doubtless try to say you should have been charged a lot more for a business tariff etc etc.

They have agreed to refund the overpayments on the domestic tariff.

Terrylw1

No probs, happy to help.

Your Supplier has to cover the VAT/CCL anyway in the bills and they should just replace it with 1 big bill with all your payments on. It will also state the dates on just incase you get audited for any reason.

Your Supplier will usually divide your bills into each quarter (91 days) and then if you work out over 34 units per day in elec, you pay the higher rates.

So, high estimates can cause problems. If a reading from you or a meter reader reduces a previous estimate they will recalculate tax to the lower level in the new bill. However, unless they replace the previous bill it's likely you will overpay tax. That sometimes happens so worth checking.

fc123

Sorry, I just need to add that, though I feel a bit stupid not even noticing this for years, the elec bill is tiny and only once a quarter...whereas I go through a foot of invoices each quarter for much larger sums...plus we had 3 premises up until 2 yrs back....no excuse not keep track but small business, 7 day working and all that.:D

We were also being charged 4 times our neighbour for rubbish collection because I just paid the bill each month and never thought that they would just keep putting mine up (10 yrs customer) and new customers were getting cheaper rates....found out all about those rolling contracts too...what a scam!!
I had NO idea, until I found this site, that regular, long standing customers ended up with the WORST deals! We run our business in the opposite way!!

Saved on shop insurance too by £400 pa...just 1 little 'phone call.

Sorry to digress....just letting off steam and this site with helpful posters who take time with queries like mine is fantastic :T