Liability ― supplies of fuel and power

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note examines the liability of supplies of fuel and power.

For an overview of the concept of VAT liability generally, see the Liability ― overview guidance note.

For in-depth commentary on the legislation and case law on supplies of fuel and power, see De Voil Indirect Tax Service V4.406.

Liability of fuel and power ― the basics

The default position is that a supply of fuel and power will be liable to VAT at the standard-rate. However, certain supplies of fuel and power which are made for a ‘qualifying use’ (see below) are subject to the reduced-rate of VAT.

The reduced-rate applies to a wide range of kinds of fuel and power including solid fuels, gases, oils, electricity, heat and air-conditioning, provided they are supplied for a qualifying use.

Qualifying use includes both ‘domestic’ use and a charity’s non-business use. In this context, domestic use includes certain ‘deemed’ domestic supplies which would not be considered to be domestic in the ordinary sense of the term. For example, some supplies

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