VAT on heating oil - passing cost to customer?

[The Byre]

We have a customer who is using a facility of ours for six months. Despite global warming, this will involve heating the place. Is there any legitimate way of passing on the cost of heating, lighting and water for the facility, without charging them 20% VAT? They are paying VAT on the facility rental, but they are not VAT registered, so the buck literally does stop with them!

I need to present an invoice and simple contract on Monday, hence the posting here, rather than waiting until Monday and asking our accountants.

 

[paulears]

Is it not 5% on some of these services?

 

[The Byre]

Yes, but regular VAT is 20%. If we buy, say 2 cu m of oil @ 60p a litre (i.e. £1,200 plus 5% VAT) and these people use half that, do I sell them the cost of heating the place at 5% or at 20%?

 

[Scalloway]

The de minimis rule may allow you to charge 5% VAT. All supplies of not more than 2,300 litres of fuel oil, gas oil or kerosene are subject to the reduced rate regardless of use.

https://www.gov.uk/government/publi...nd-power/vat-notice-70119-fuel-and-power#oils

 

[The Byre]

Ooo - thanks for that! Further reading there has answered all my questions!

 

[STDFR33]

Unless the utilities are separately metered to the tenant, the charges follow the treatment of the rent.

As there is VAT on the rent, then the recharges will also have VAT at standard rate.

Case law supports this:
HMRC v The Honourable Society Middle Temple

 

[The Byre]

The supplies are all separately metered, but estimated at present and final adjustment made at the end of the heating/lighting period. We do this, so that the customer is aware that flipping-on up to 24kW of lighting or cranking the heat up to 25C will cost extra. Water is just £20 pcm so we ain't too fussed there.