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VAT on woodchips

Hi

What rate of VAT would you put on woodchips that are sold as fuel? I am inclined to use 5% but am concious that woodchips can be used for other sources but client sells the wood chips to a customer who uses them exclusively for fuel.

If 5%, how do we satisfy ourselves that these wood chips are being used for fuel and not in some other manufacturing process?

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By BKD
15th May 2012 15:46

Actual use ...

... is irrelevant. Provided that the chips are advertised, packaged, and sold, as fuel - and priced accordingly - the 5% rate should be applied. No different to someone buying logs as fuel and then somehow managing to turn then into pulp for newspaper.

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15th May 2012 16:14

sold to a fuel supplier

Would it make a difference if the woodchips are sold to a fuel manufacturer? The client sells the woodships on a wholesale basis as a by-product of his arboriculture business to someone who then packages them for the fuel business.

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By BKD
15th May 2012 16:47

Wholesale

exceljockey wrote:

Would it make a difference if the woodchips are sold to a fuel manufacturer? The client sells the woodships on a wholesale basis as a by-product of his arboriculture business to someone who then packages them for the fuel business.

My understanding is that the lower rate applies only to supplies of items sold as fuel. When sold wholesale or, as in your example, to a manufacturer, I think they ought to be standard-rated.

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15th May 2012 16:15

Interesting thought

I wonder if Gregg's have considered advertising their sausage rolls as fuel? Let's face it, the taste and ingredients are probably much the same as the wood chips.

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28th Jan 2015 11:36

Hummmmm

Looking for an answer to the 5% on sale of wood chips for fuel question, I just came across this comment. I protest. I think Greggs sausage rolls are among the best you can buy. I tried M&S specials at a colossal £1.99 each as well as those from my local independent bakery and I put Greggs as best every time!

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By neileg
16th May 2012 10:25

Certificate

VAT Notice 701/19 sets out the details that a customer needs to provide for a mixed use supply of fuel to justify the reduced rate. I suggest that if the same details are supplied in a 100% qualifying supply this will support the reduced rate just as well.

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10th May 2013 13:48

What if it is sold loose?

I appreciate this thread is almost 12 months old. Farmer has bought a shredder and is selling woodchip as fuel by the trailer load – he delivers large agricultural trailer fulls direct to customers. He does not package the woodchip – it is sold loose per trailer. He does not market it because he has generated sufficient business by word of mouth. VAT 7.1.3 says is standard rated “if not held out for sale specifically as firewood.” It goes on to say:

 

'Held out for sale' as fuel means that you advertise and otherwise describe the product at its point of sale as fuel or firewood, and that this is consistent with the packaging and wrapping in which you supply it.

 

It says “advertise and otherwise describe”. My client does not advertise but does “otherwise describe”, but the test is an “and” test not an “or” test so appears to fail.

 

It is not packed or wrapped – but that is because of the volume. So does it fail this test too?

 

Finally my client is aware that part of one load was used by the customer as animal bedding. This doesn’t affect the “held out for sale”.

 

Any thoughts?

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