Recharging Costs to Customers VAT (non-disbursement)

Recharging Costs to Customers VAT (non...

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Hi all,

Hope all is well.

Looking for a bit of clarification on two matters of usual recharges of costs to customers.

If we take the example of paying for gas and electricity that was agreed to be recharged to the customer 'A' however for which we are liable as the property is in our name (hence cannot be a disbursement).

Electricity = £1,000 + VAT @ 20% = £1,200.

Gas cylinder refills (non-heating e.g. tool powering ar reduced rate) = £1,000 + VAT @ 5% = £1,050.

These costs are going to be passed on to the customer. Both our company and the customer are VAT registered.

Regardless of recharges our company reclaims the VAT at 20% and at 5% as not a disbursement.

Firstly - Must we recharge the customer 'A' VAT as not treated as disbursement rather than just the net?

Secondly - if we must recharge VAT to customer 'A' should this be at the respective rates it was claimed i.e. 20% and 5% and not all at 20%

Thanks in advance all!

Coeus.

Replies (3)

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chips_at_mattersey
By Les Howard
10th Jun 2015 16:56

Recharges

Is the re-charge the only supply?
If the supply is additional to a lease, then the supply will usually follow the liability of the lease.

If it is a stand-alone supply of electricity, then the 20% applies, unless the supply falls within the test for 5%.

I would expect gas cylinder refills will be treated as a supply in their own right.

Thanks (1)
Replying to rockallj:
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By Coeus
26th Jun 2015 10:45

Hi,

 

Sorry for the late reply been very hectic!

 

So we are saying there are multiple supplies of goods or services?

 

The main supply to the customer is use of warehouse however it is customer managed - as such any costs were incur are recharged to the customer.

 

So the question is should (1) should VAT be included on the recharges to the customer and (2) should VAT be charges at the prevailing rate in which it was incurred by our company (e.g. standard rate, reduced rate, zero rated, exempt).

 

 

Thanks any and all for your help!

 

 

Coeus.

Thanks (0)
chips_at_mattersey
By Les Howard
26th Jun 2015 14:00

Re-charges

The rate of VAT that you charge will not necessarily be that charged TO you. The charge for gas bottles is reduced rated depending on the rules in Notice 701/19, chapter 4.

Thanks (0)