Vat rate for firewood sale to pubs - recent changes

[Bustergasket]

Hey all from Apr 2016 looks like the rules may have changed, I discussed this last year with hmrc and we agreed selling firewood to public houses would be 5 % rated based on the volume and the fact they are not selling on, however I just did the same exercise and have to say I did not arrive at the same conclusion as it says inns are not residential so don't qual for the lower rate, I will try and speak to them tomorrow but in the meantime what's everyone else charging or more importantly what's the correct rate to apply ? cheers

[gdh]

As far as I knew it's the fact that it's not being sold on that's important, otherwise all sales to businesses would be 5% which I didn't think was the case. Be interested to hear what you learn though.

 

Edit:https://www.gov.uk/government/publications/vat-notice-70119-fuel-and-power#P278_29712

 

It seems like no changes but section 3 makes things more confusing.

Edited November 23, 2016 by gdh

[richy_B]

It's definitely 5% to residential customers (who intend to use it themselves). 20% to someone who is intending to resell. The grey area, or aea that I suppose is open to individual officer interpretation is 5% to 'end user'.

 

Personally I would charge a pub 5%.

 

How much do you sell to pubs in a year? If it's only a few £k I can't see HMRC being bothered. If you are supplying the whole of wetherspoons it might be wise to investigate further.

[Billy]

I was under the impression, domestic heating fuel qualified for the lower rate. So charge at 20% to pubs....I expect they pay 20% on their heating oil also for this reason.

[County 764]

Think it has to do with volumes sold to them and if they use it as fuel.

[richy_B]

3.2.2 Supplies deemed to be for domestic use

Supplies of certain small quantities of fuel and power - known as de minimis - are always treated as being made for domestic use, even when the supply is to a business customer. These limits are explained in Sections 4 (gases), 5 (electricity), 6 (oils), and 7 (solid fuels). Supplies within the limits should be taxed at the reduced rate. You do not need a certificate to apply the reduced rate to such supplies (see paragraph 3.5

 

 

7.1.3 Firewood

Ready-cut pieces of wood of a size suitable for use as fuel - such as logs, short waste ends or damaged timber - and held out for sale specifically as firewood maybe sold at the reduced rate. If not sold as firewood they are standard-rated.

Edited November 23, 2016 by richy_B

[richy_B]

From -

 

https://www.gov.uk/government/publications/vat-notice-70119-fuel-and-power/vat-notice-70119-fuel-and-power#vat-liability-of-fuel-and-power---overview

[County 764]

Note 7.1.2

A supply of wood, peat or charcoal that you hold out for sale solely as fuel qualifies for the reduced rate provided that your customer does not intend to resell it. This applies regardless of the amount you supply.

[benedmonds]

Does it make any real difference if you have to charge 20%.. Surely most pubs are VAT registered so will claim it back..?

[Bustergasket]

Thanks all, some really useful info, will be really interested to bottom this out as there is so many different views, section 7 The reduced VAT rate applies to supplies of coal, coke and other solid combustible materials for a qualifying use (see Section 3) provided:

 

you hold them out for sale solely as fuel

and they are offered in a form and at a price that is compatible with their being sold as fuel

 

key for me is qual use section 3 business is not qualified use, also if u undercharge u may have to make up the shortfall

 

3.1 What is ‘qualifying use’?

Qualifying use means:

 

domestic use (see paragraph 3.2), or

charity non-business use (see paragraph 3.3).

If you apply the reduced rate to supplies of fuel and power incorrectly and cannot satisfy us that you have taken reasonable steps on these points, you may have to pay any VAT that you have undercharged.

 

3.2 What is ‘domestic use’?

3.2.1 Supplies for domestic use

Supplies of fuel and power for genuine domestic use are eligible for the reduced rate. The provider must be certain that the supply is to a dwelling or certain types of residential accommodation. Examples of allowed residential accommodation are:

 

armed forces residential accommodation

caravans

children’s homes

homes providing care for - (a) the elderly or disabled(b) people with a past or present dependence on alcohol or drugs© people with a past or present mental disorder

houseboats

houses, flats or other dwellings

hospices

institutions that are the sole or main residence of at least 90% of their residents

monasteries, nunneries and similar religious communities

school and university residential accommodation for students or pupils

self catering holiday accommodation

The following are treated as part of the same residential unit:

 

buildings such as garages used with houses

subsidiary buildings situated a short distance away, such as a garage in a block located away from a house

corridors, lifts, hallways and stairways in a residential unit

The following are not considered residential accommodation for the purposes of fuel and power:

 

hospitals

prisons or similar establishments

hotels, inn or similar establishments