What do the HMRC guidelines say about the calculation of VAT De Minimis on Multi-Meter premises?
VAT De Minimis is the automatic application of VAT at the lower rate of 5% and application of CCL exemption for any billed period where the average amount of energy consumed does not exceed an average rate of 145 kWh per day (4,397 kWh per month). The volume threshold calculated is based upon the aggregated energy consumed for all meters for each ‘set of premises’, owned or occupied by one customer.
HMRC refer to a set of premises as a collection of buildings in close geographical proximity owned or occupied by one customer where each building serves another in some necessary or reasonably useful way.
If this applies to you, please complete the aggregation instruction pro-forma and email it to [email protected].
What is it?
TotalEnergies Gas & Power has been working on a gas billing option that allows us to associate multiple meters onto one account where they are part of a single premises, as per HMRC VAT De Minimis guidelines. This enables us to bill multiple meters on one invoice and calculate VAT based on the combined consumption.
Why is it happening?
Prior to the Single Meter Supply Point project (SMSP) in July 2015, gas meters could be aggregated onto one supply point/account for the purpose of pricing and billing where meters were at the same premises.
The Single Meter Supply Point project was an industry-wide change driven by the UK energy industry regulator (Ofgem) with which all gas suppliers had to comply. TotalEnergies Gas & Power de-aggregated each gas meter point to have its own individual account. This meant that the ‘De Minimis consumption rule’ was applied at meter point level rather than at premises level.
Subsequent to completing SMSP, it was identified that TotalEnergies Gas & Power may have inadvertently been under charging VAT and Climate Change Levy (CCL) where the ‘De Minimis consumption rule’ should have been applied at premises level in line with the HMRC guidelines.
Which meters does this affect?
Prior to SMSP de-aggregations, you may have had accounts which included multiple meters for billing. Since 01/07/15 you may also have additional meters that have started billing with TotalEnergies Gas & Power, located at the same postcode as existing meters we supply.
These meters are being considered within the scope of this project.
Does this affect my future billing?
Your billing will only be impacted where TotalEnergies Gas & Power aggregates these meters onto one account.
When this happens, we will consolidate these under one of the existing accounts numbers you already have with us. You will be invoiced for all meters under that account on one invoice. VAT and the ‘De Minimis consumption rule’ is are then applied to the total consumption on all meters under that account.
Information such as Contract Name, Billing address, VAT and CCL exemptions and any live Direct Debit instructions will be consolidated onto one account. Further clarification may be required from you to enable this. There will be no change to the method in which you receive your invoices.
Will this affect my previous billing?
Where TotalEnergies Gas & Power aggregates meters, we will need to review prior billing periods back to July 2015 or the start of your contract if after July 2015. We will then subsequently determine whether a historical reconciliation needs to be applied.
This review will only be undertaken when the aggregation of all meters at your premises is complete.
How will I know when it is happening?
TotalEnergies Gas & Power will be sending communication in July 2018 to existing customers who have multiple meters with a matching postcode. This communication will include a pro-forma to be completed where we have determined that you have meters that need aggregated on to the same account.
If you are a new customer to TotalEnergies Gas & Power after July 2018, it is important that you advise us where meters need to be aggregated so that we can set up your account correctly for you.
Will this affect my gas price?
No, this change will not affect your contracted price. Please note however, where MPRs are aggregated onto one account, each MPR will still be subject to its own individual unit rate and standing charge. This will result in multiple prices being displayed on a single invoice.
Will this affect my Power Account?
No, this change will not affect your Power Account.
What do I need to do next?
Please complete the aggregation proforma that will be sent to you in July 2018 and either post in the pre-paid envelope supplied or email to [email protected].
VAT & CCL exemption forms can be found under the Quick Links/Business Energy Forms.
If you believe that we may need to make any changes to the billing information such as Contract Name, Billing address, VAT & CCL exemptions and any live Direct Debit instructions, then please contact the number on your invoice and we will be happy to discuss this with you.
Where can I find further information?
If you have a Third Party who manages your energy contract for you, we suggest you contact them in the first instance. If not, contact your Servicing Account Manager directly. Alternatively, you can contact us using the below details:
T: 0333 003 7874
E: [email protected]
Having the correct VAT rate on your invoices is your responsibility. If you do have any questions regarding this, we recommend you either refer to the HMRC website or contact them directly.