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)
Please login or register to join the discussion.
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.
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.