Liability of fuel and power ― the basics

The default position is that a supply of fuel and power will be liable to VAT at the standard-rate. However, certain supplies of fuel and power which are made for a ‘qualifying use’ (see below) are subject to the reduced-rate of VAT.

The reduced rate applies to a wide range of kinds of fuel and power including solid fuels, gases, oils, electricity, heat and air-conditioning, provided they are supplied for a qualifying use.

Qualifying use includes both ‘domestic’ use and a charity’s non-business use. In this context, domestic use includes certain ‘deemed’ domestic supplies which would not be considered to be domestic in the ordinary sense of the term. For example,