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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4715
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Can a non vat registered Caravan/Lodge Park owner include 20%

Customer Question

can a non vat registered Caravan/Lodge Park owner include 20% vat in the rate that he resells power to home owners on his Park?
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.
Hello and welcome to the site. Thank you for your question.

You have to be VAT registered in order to charge VAT on your supplies.
Confirmation of this can be found here within the overview section of VAT Registration. Look at the heading While you wait. It clearly states "You can’t charge or show VAT on your invoices until you get your VAT number."
More information on this here

https://www.gov.uk/vat-registration/overview


If the Caravan/Lodge Park Owner is not VAT registered, then VAT charged to him becomes a cost to him. Unless he incorporates this cost within his buying in price and reflects it in his selling price, he would make a loss. You would agree, he is not there to make a loss. So he would inflate his selling price to recover VAT paid on purchases. This is normal practice in business.

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 1 year ago.

should the park owners be paying 20%vat on domestic electricity?

I accept that the Park owners have a holiday business at the park and 20% is applicable to that, but should they be paying 20% for electricity used by resident domestic users?

Expert:  taxadvisor.uk replied 1 year ago.
Charles, thanks for your reply.

VAT rate applied for supply of electricity to the park owners would be based on their consumption.

You will find this article helpful in understanding VAT rates for supply of gas and electricity.
Look under "How much VAT should I be paying on my gas and electricity bills.

https://www.simplybusinessenergy.co.uk/cheapest-price-comparison/bills/electricity-and-gas-bills-understanding-vat~77/


I hope this is helpful and answers your question.
Customer: replied 1 year ago.

obviously I am not asking the right questions.

I understand about deminimus supplies of power (vat notice 701/19)

What I need to know is, should the Park owner be paying 5% or 20% for our domestic power.

Everything I read including ofgem guidance says it should be 5%.

Can you confirm 5% or 20%

Expert:  taxadvisor.uk replied 1 year ago.
Charles, thank you for your reply.

If he is sourcing supply on one meter and it is not possible to separate business electricity from energy used for domestic setting and his total demand is greater than 33 kWh per day or 1,000 kWh per month, then he is most probably paying VAT at 20%.

You would qualify for reduced rate if the consumption was below the aforementioned usage and where the majority of electicity is used for domestic purposes.

There are a number of other exceptions to the 20 per cent rate of VAT. These include:


- Where the majority of the energy is used in a domestic setting

- Where the business is a home, hospice, rehabilitation residence or place of care for children, addicts, members of the armed forces, students or the elderly

- Where the business is a nunnery, monastery or other religious building

- Where the business is a self-catering holiday accommodation, house boat, caravan or where it is a primary residence for over 90 per cent of the people living there

- Where at least 60 per cent of the energy used supplies a premises meeting these criteria


My advice to you would be check with the owner if any of the above applies.

I hope this is helpful and answers your question.
Customer: replied 1 year ago.

electricty is supplied to the park on one meter. All residents have their own separate meters recording usage at their own properties and are billed on the amount used, all less than 33kwh per day. The Park owner is then able to calculate his own usage. Can you confirm that I should only be paying 5% vat included in my unit rate. I accept that the park owner needs to recover his costs but his cost should surely be at the 5% vat charge.

Expert:  taxadvisor.uk replied 1 year ago.

Charles, thank you for your reply.

Separate meters for residents are for internal charging purposes only.

If the owner has paid VAT at 20% on his overall consumption based on the one meter covering the whole site, then I'm afraid you will have to bear this higher cost within the charge to you notwithstanding the fact your own consumption is less than 33kWh per day.

If he was VAT registered then you would be charged VAT at 5% being a domestic customer irrespective of what VAT rate is charged to the owner.

I hope this is helpful and answers your question.

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