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What rate of VAT is payable?
We receive many queries from park owners about whether they are classed as business or domestic customers when selecting an energy contract.
When electricity is resold by park owners to holiday caravan or park home owners VAT can only be recovered at the reduced rate of 5%. This is because energy use in a caravan or park home, whether for residential or holiday purposes, is considered domestic use. However, park owners may find themselves paying VAT at the 20% rate and be unable to recover this cost from their customers.
A notice issued by HMRC clarifies that where 60% or more of the energy used is for domestic purposes the whole bill must be calculated at the reduced rate of 5 % VAT.
If you are concerned that you are being charged at the incorrect rate, you should contact your supplier.
If you have any queries regarding the topic of this blog or if you are interested in subscribing to our Parklaw service, contact the Parks Team by telephone on 01392 207020 or email firstname.lastname@example.org