VAT on rates - ?

Jan 9, 2006
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Our lodge is on a small site (about 32 units) which has just changed ownership. New owner is charging 17.5% VAT on the non-domestic rates and water rates, whereas previous owner (who had 2 sites and thus a higher turnover) didn't. It's meant that our rates bill has gone up by 50% - can they DO this? Is anyone else charged VAT on rates, and how much VAT are you charged for gas and electric (we're charged 5%)...?
 
Mar 14, 2005
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Usually these site owners can charge pretty much what they want to when providing services, I'm afraid they have you over a barrel. However I'm sure that recently there was a law passed that limits the price for water/electricity. The site owner can only charge you what he has to pay to these companies. To make it clear, if he acts as a re-seller of the utilities, he can only charge what he himself is charged, he cannot make a profit.

It is of course possible I have this wrong, so seek further advice Michael.
 
Nov 6, 2005
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Gas and electricity - if you're charged for metered energy, within Ofgem's rules on price markup, Vat should be charged at 5%. If you're charged for an unmetered connection Vat should be charged at 17.5%, like any other facility.
 
Nov 1, 2005
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I think the law is now that no one can sell electricity except the power companies. So a site owner cannot charge for elec, they can only charge an all inclusive rate for a pitch with hook up. I'm not sure the same applies to water.
 

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Mar 14, 2005
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VAT on rates is a complex area, the basic rule of thumb is that if the site owner is the rateable person then the onward charge will take the liability of the main supply, if the main supply is rent and that is taxable then the supply will be standard rated (17.5%), however if the rateable person is the tenant and the site owner is paying on their behalf (disbursment) then no VAT would be chargeable. I would suggest that you examine the contract to confirm what the supply actualy is. Then possibly call the VAT enquireies line who may be able to help.

As I said at the begining it is a complex area.
 
Aug 4, 2004
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Craig is correct. They cannot bill you seperately for electric or gas unless they are a supplier. Not sure on the VAT issue but they would have to be a registered company with a turnover exceeding a laid down amount.

Regarding supplying and charging for it, if they do so they are contravening a number of regulations and can be in serious hot water. I work for the biggest independent supplier in the UK and it costs us a fortune to obtain a licence. We have been in operation for the past 6 years and come across this on a daily basis.
 
Jan 9, 2006
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Craig is correct. They cannot bill you seperately for electric or gas unless they are a supplier. Not sure on the VAT issue but they would have to be a registered company with a turnover exceeding a laid down amount.

Regarding supplying and charging for it, if they do so they are contravening a number of regulations and can be in serious hot water. I work for the biggest independent supplier in the UK and it costs us a fortune to obtain a licence. We have been in operation for the past 6 years and come across this on a daily basis.
Ian, not sure what you and Craig mean. The site owner gets the meters read every month and bills us quarterly, adding 5% VAT. The gas is also metered, albeit from an lpg supply, and 5% is added to that too. The park owner isn't a supplier, she's just passing on the cost that she's been charged (although I understand she CAN make a profit on the gas supply). I don't see how it could work the way Craig suggests - an all-inclusive pitch fee. The pitch fee carries 17.5% VAT, too ...?
 

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