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Recharging Electricity to Commercial Tenants

How to treat VAT

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Good Morning.

I am a landlord for a property which is let to two tenants across two floors. 

As landlord, I pay for the Electricity supply and usage and recharge this to the tenants according to their usage (the top floor has a submeter). 

I absorb the costs for the shared areas such as the entrance lobby etc. 

I pay 20% VAT on the supply and overall usage but both tenants' usage falls below the de minimis usage. 

Should I be applying the standard or reduced rate of VAT when recharging their indivual usage to the tenants. 

The building is opted for VAT and we charge this on all other supplies. 

Any advice is much appreciated.

Replies (4)

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By David Ex
25th Nov 2021 10:38

srj03 wrote:

Any advice is much appreciated.

My advice would be not to base actions on “advice” from an anonymous Internet forum. You don’t want to risk doing the wrong thing based on bad advice from someone you have no recourse to.

Who dealt with your OTT? They must know your circumstances so would be better placed to offer a view.

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Replying to David Ex:
By srj03
25th Nov 2021 10:50

Thank you for the advice.

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By paul.benny
25th Nov 2021 12:18

+1 to David's recommendation. But if you want to check for yourself, VAT701/19 deals with VAT on energy.

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By 356B
25th Nov 2021 16:20

see reply on Tweb.

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