EV Charging and the 5% reduced VAT rate: Charge My Street First Tier Tribunal decision

In a recent FTT decision in Charge My Street Limited, the Court found that electric vehicle charging provided at public charging stations, should be at the reduced VAT rate of 5%.

Charge My Street Limited (CSL) is a supplier of electric vehicle charging points in public places in the UK.  CSL was of the opinion that VAT was due at the reduced rate, the rate applied to supplies of fuel and power for domestic use.

HMRC considered that VAT was due on public electric vehicle charging at the standard rate and provided CSL with a written ruling that CSL appealed.

HMRC’s argument was based on Item 1, Schedule 7A, VATA 1994 stating that supplies of domestic fuel are reduced-rated.  However, CSL argued its supplies qualified for reduced rating under Note 5g, which states:

‘For the purposes of this Group, the following supplies are always for domestic use:

(g)  a supply of electricity to a person at any premises where the electricity (together with any other electricity provided to him at the premises by the same supplier) was not provided at a rate exceeding 1000 kilowatt hours (kWh) a month.’

The FTT’s findings were on several points, being that ‘to a person at any premises’ did not mean, ‘to a person at their premises’ and that ‘any premises’ did not mean, ‘any buildings’, which could mean any identifiable property, including a defined public area.

With regards to the de minimis, provided the supply met the 1,000 kWh test, it could be reduced-rated and it was clear that electricity provided at each charging point did not exceed this threshold.

HMRC argued that when an ad hoc supply was made by CSL, the rate used against the de minimis test should be 1,000 kWh, divided by the number of days in a month, however, there was nothing in VAT legislation to support this.

There were also other arguments around use of a third party app to pay for charging, whether this met the de minimis test and agent versus principal position.

HMRC may still appeal the decision, but in the meantime, claims for overpaid VAT should be considered, if any of your clients provide electric vehicle charging services in this way.