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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4973
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Company A works out of buildings adjacent to a minority shareholders

Customer Question

Company A works out of buildings adjacent to a minority shareholders home. Water and Electricity bills are all in Company name and VAT is paid on them and reclaimed. Company charges the householder for their consumption (separate internal meters provide for this).

What VAT if any does the company add to the householders bill?
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.

Hello and welcome to the site. Thank you for your question.

Water and sewage charges
Commercial usage
Water charge - carries VAT at standard rate 20%
Sewerage charge - NO VAT

 

More information on sewerage services can be found under sec 3 of VAT Notice 701/16 here

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_CL_000132&propertyType=document#P110_7568

Electricity
Commercial usage - carries VAT at standard rate 20%
Domestic use - carries VAT at 5%

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

 

Expert:  taxadvisor.uk replied 3 years ago.
John, VAT rates for water for domestic and no industrial use are covered under Sec 2 of the same notice .. (it is zero-rated)

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 years ago.

Do I have to charge vat on the electricity?

Expert:  taxadvisor.uk replied 3 years ago.
John, thank you for your reply.

Electricity and gas for domestic and residential use carries VAT at 5%
Confirmation of this can be found under "Power, utilities, energy and energy saving, heating" here
http://www.hmrc.gov.uk/vat/forms-rates/rates/goods-services.htm

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

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