VAT Certification Declaration

Who qualifies for VAT relief 

The UK standard rate of VAT applies to supplies of gas and electricity. HMRC VAT Guidance outlines that the following energy supplies can be charged at the reduced rate of  VAT:

1. Domestic use
2. Charity non-business use
3. De minimis

For supplies that fall into the categories domestic or charity non-business use, the relief is permitted based on the qualifying use as defined by HMRC. Small supplies of energy also qualify for VAT relief and these are treated as domestic supplies on the basis of minimal usage.

The De minimis rule

The default VAT position for the supply of energy is that VAT is charged at the standard rate. Where consumption by a business does not exceed a daily average of 145 kWhs for Gas and 33 kWhs for Electricity across the invoicing period, the reduced VAT rate will automatically apply. No VAT Certificate Declaration is required. 

VAT Certificate Declaration

• In order to benefit from 1) or 2) above, it is necessary for a business to submit a VAT Certificate Declaration for each site/premises which declares their qualifying use. All meters at the site/premise must be included.
• It is the customer’s responsibility to inform their new energy supplier if they qualify for VAT relief by completing and submitting a VAT Certificate Declaration.
• If the VAT Certificate declaration is not completed in full, it will not be processed and will be returned. This will delay any application of reduced rate VAT relief.
• The completed VAT Certificate Declaration should be emailed to customerdata@engie.com or posted to ENGIE, No1 Leeds, 26 Whitehall Road, Leeds, LS12 1BE.
• Please note HMRC rules govern that we cannot retrospectively apply VAT relief beyond 4 years from the date the VAT Certificate Declaration is processed. Any backdated relief will be processed subject to our discretion.

Customers’ representatives

We must have an appropriate letter of authority (LOA) in place to accept a VAT Certificate Declaration from a broker/third party intermediary (TPI). This must be submitted with the VAT Declaration Form. If the broker/TPI has the authority to sign the VAT Declaration Form then the LOA must specifically reference they have the appropriate authority for VAT.

Climate Change Levy

Climate Change Levy (CCL) is not charged where the reduced rate of VAT applies. Once a valid VAT Certificate Declaration has been applied to the account CCL will not be charged. Customers should not submit a HMRC Form PP11 if they are applying for reduced rate VAT relief.

Domestic use

The following types of properties/sites all qualify for the reduced VAT as domestic supplies.

• Residential
• Landlord supply
• Housing Association property/properties
• Residential care home
• Student accommodation
• Boarding school accommodation
• Holiday park accommodation
• Self-catering accommodation

Where a site/premises is used for both domestic and business use the percentage split for qualifying domestic use must be calculated on a fair and reasonable basis.

This percentage should be declared on the VAT Certificate Declaration in the relevant section.

Charity non-business use

Where a charity is carrying out non-business activities, they should complete the Charity non-business VAT Certificate Declaration. Non-business activities relate to the provision of goods or services to the customers of the charities for no charge.

Registered charities that engage in business activities at the site will not qualify for 100% VAT relief. HMRC define the following as business activities:

• Sale of goods, services as well as food and drink.
• Hiring of charity run buildings
• Provision of membership by clubs, or similar bodies. 

An activity may still be a business activity even if charges are only set to recover costs incurred – it is not necessary to make a surplus for an activity to be business.

If a charity engages in both business and non-business activities on the same site/premises, only qualifying non-business use can be eligible for the reduced VAT rate. The charity must apportion the site/premises consumption between qualifying and non-qualifying use on a fair and reasonable basis. In order to avoid further queries, customers should provide details of how the qualifying percentage has been calculated.

Sites/premises that do not qualify

HMRC have confirmed that the following types of organisation would not qualify for the reduced rate of VAT on their energy supplies:

• GP surgeries, dental surgeries and other NHS health providers (as they are not registered charities)
• Golf clubs
• Other sports clubs charging for use of facilities (e.g., bowls, squash, tennis)*
• Independent fee paying schools
• Leisure Centres regularly charging for use of facilities
• Museums and other types of buildings charging entrance fees
• Non-profit organisations regularly charging for use of a premises
• Charity shops

* Community Amateur Sports Clubs (CASC) are permitted to register with HMRC to benefit from a range of tax reliefs.  Where there are charges to members for the use of facilities, even as a registered CASC, there is no relief available for VAT purposes (further information can be found in the HMRC links below).

Educational Establishments

Only specific types of schools can benefit from the reduced rate of VAT.  These are:

1. Free schools
2. Academy schools
3. Voluntary/Grant maintained schools
4. Faith schools
5. Foundation/Foundation special needs schools
6. Special needs school, 
7. Self-Governing schools
8. Further & Higher Education College. 

For educational establishments, please confirm the school type on the VAT Certificate Declaration by ticking the relevant box.

For clarity, independent fee paying schools and universities do not qualify as they are charging for education (i.e. business activity).  However a site/premise may qualify for VAT relief for the energy consumption related to student residential accommodation. In this instance a VAT Certificate Declaration – Domestic use should be submitted.

Multiple meters within a site/premises

Where there are multiple meters within a site/premises, the qualifying use of energy applies to the total consumption across the whole site/premise that is being supplied. (Please see HMRC definition of premises below). All of the meters must be listed on the VAT Certificate Declaration.  In order to declare the percentage of the energy qualifying use, the calculation must include the total percentage to cover all of the meters.

Where there are multiple meters across one site/premise, these will be aggregated for the purposes of calculating usage (please see below for the HMRC definition of premises.

HMRC definition of premises

HM Revenue & Customs’ definition of what constitutes premises is: a building or collection of buildings in close geographical proximity, owned or occupied by one customer within a defined curtilage on one site, where each building serves the other in some necessary or reasonably useful way.

Useful Links

HMRC VAT general enquiries -  please call 0300 200 3700 or contact HMRC

For further information for sites/premises which qualify for reduced rate VAT please access the links below and/or contact your VAT advisor.

HMRC VAT on fuel and Power notice 701/19

HMRC Community Amateur sports clubs guidance

Charities business activities basic principles