Reduced VAT rate – supplies of fuel and power

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Reduced VAT rate – supplies of fuel and power
  • Qualifying customers
  • What can the reduced rate be applied to?
  • Supplies of gas
  • Supplies of electricity
  • Current rules on connecting dwellings and certain other types of buildings to the mains power
  • Supplies of oil
  • Supplies of solid fuel
  • Steam and heated water
  • Ventilation and refrigeration
  • Specific transactions

The supply of fuel and power is treated as a supply of goods for VAT purposes. Supplies are fuel and power are normally liable to VAT at the standard rate. However, providing certain conditions are satisfied, it is possible for suppliers to charge the reduced rate of VAT on certain supplies of fuel and power.

This guidance note provides a comprehensive overview of the conditions that need to be satisfied in order for a business to supply fuel and power at the reduced VAT rate. It should be read in conjunction with the List of types of fuel and power liable to VAT at the reduced and standard rate guidance note, which provides a list of the actual products that are liable to VAT at either the reduced or standard rate.

VATA 1994, Sch 4, para 3; VATA 1994, s 29A; VFUP1000; 2006/112/EC , Article 113; Notice 701/19 ; De Voil V4.406 (subscription sensitive)
Qualifying customers

The following customers are eligible to receive supplies of fuel and power at the reduced VAT rate:

  • domestic customers who use the fuel and power for domestic purposes
  • charities using the fuel and power for non-business purposes
  • relevant residential purpose properties, providing the de minimis limit is not exceeded (see below)
  • customers using the fuel and power for part qualifying use, where at least 60% of the fuel and power is used for qualifying purposes
Domestic use

Supplies of fuel and power made to private households for domestic use are liable to VAT at the reduced rate. Supplies to the following properties are also deemed to be for domestic use and therefore liable to VAT at the reduced rate:

    More on Reduced rated supplies: