We receive many queries from park owners about whether they are classed as business or domestic customers when selecting an energy contract.
Is energy use in a holiday park classes as business or domestic use?
When electricity is resold by park owners to holiday caravan or park home owners VAT can only be recovered at the reduced rate of 5%. This is because energy use in a caravan or park home, whether for residential or holiday purposes, is considered domestic use. However, park owners may find themselves paying VAT at the 20% rate and be unable to recover this cost from their customers.
A notice issued by HMRC clarifies that where 60% or more of the energy used is for domestic purposes the whole bill must be calculated at the reduced rate of 5 % VAT.
What if you are being charged at the wrong energy rate?
If you are concerned that you are being charged at the incorrect rate, you should contact your supplier.
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For further help or support please contact our specialist Parks team who will be happy to provide bespoke advice and guidance.
