charging 20% VAT for domestic-use firewood - advice?

[Harry Davis]

I've enquired of two local companies regarding possibly buying firewood from them, in the form of unsplit logs, which I would saw and split myself, for use on our woodburner at home.

The VAT rate should be 5%. (Source: HMRC Notice 701/19, August 2012: s2.1, on fuel for domestic use, and s3.2.2, defining "domestic use" as including use in "houses, flats or other dwellings".)

Both companies insist on charging 20%.

I've offered to give them written confirmation that I am buying the wood for domestic use as fuel, but they aren't interested. They both say that they won't sell wood to anyone, domestic customer or otherwise, except if they can charge VAT at 20%.

If I did pay four times as much VAT as I should, I strongly doubt that I would be able to get my money back from the HMRC.

Advice?

If they do get someone to pay 20% who should only pay 5% (and I imagine they have done that in loads of cases), is that VAT fraud? Or just a tort against the customer?

(PS I've only recently encountered the world of buying firewood, and there seem to be loads of sharp practices, but I digress.)

Harry

[Fredxx]

Phone HMRC, they can be very helpful. If the local company are wrong then I'm sure HMRC will mend their ways.

I guess it depends on how these "logs" are described.

[polygonum]

Agreed. Charging 20% would be ripe for exploitation by then telling HMRC they only charged 5%.

Also, I think that they must post their prices inclusive.

If they insist on charging 20% then they are, IMHO, saying that 15/120 of the price is VAT but without the legal basis for doing so.

[McKevvy]

No disrespect but cant you buy a chainsaw (=A3100 for a basic one) and keep an eye out on woods and forests? There's plenty trees blown down and large branches blown off.

McK,

[Andrew Gabriel]

I bumped up against something like this, when buying an air-sourced heat pump from B&Q. Basically, it works out to be a load of paperwork for them to sell these with 5% VAT, and as B&Q were cheaper even at the standard VAT rate than other companies who did the 5% VAT paperwork, they simply wouldn't do it.

As long as they pass on the full VAT they charged to HMRC, I don't think anyone is doing anything illegal.

[polygonum]

If I offer something to you, and charge 30% VAT, and then pass that on the HMRC, then I think something is very wrong. So will HMRC and, if they notice, will not usually accept the excess payment.

[Bill Taylor]

They do have some justification. Most transactions involving large quantities of cord wood are going to be business to business transactions and VAT should be charged at 20%. If they charge 5% to a business customer HMRC could be down on them rather hard.

Having said that, there are suppliers who will supply cord to domestic users with 5% VAT.

[polygonum]

When VAT first started they were absolute sticklers for everything. Charging the *wrong* rate was the issue rather than whether that wrong rate was too high or too low. And I think something of that continues - but maybe they have become as crappy at collecting the tax as the government is at deciding how to spend it?

[Mel Rowing]

Woods and forests are owned either privately or by the state through the Forestry Commission. Still others are owned by charities such as the National or various woodland or nature trusts. The extraction of timber from any of these properties whether storm damaged or not would amount to theft. The right to collect firewood from cleared(harvested) areas is sold here at =A320 /acre/year.

There are rare cases where an ancient common right exists to collect firewood from the forest floor. Common rights are not enjoyed by everyone `and apply only to designated individuals such as residents of a certain village or occupiers of a particular property etc.

[McKevvy]

Right but I don't mean going and cutting down a farmers trees right outside his house, ya know? There can often be cases where a landowner wants trees felled for any reason or removed. My brother is a self employed woodworker and pays his workshop rent by going around removing trees for his landlord.

McK,

[Harry Davis]

[e-mail] (Andrew Gabriel) wrote in news:kd1lbp$pup$ [e-mail]:

I wonder what would happen if you sued B&Q. OK you agreed to pay 20%, but only because they said they weren't prepared to sell you the item and charge only the rate that was properly chargeable.

Harry

[McKevvy]

I should add - in the OPs case - that maybe this may be a method that he may supplement his supply of firewood, not replace. I don't know how old he is or whether he is upto it physically but it's always worth making friendships in the directions of landowners or those that have the sayso.

McK.

[Obadiah Binks]

I would guess that if it is delivered then 20% VAT would be correct.

[Mrcheerful]

I find that quite enough firewood arrives naturally during the year to keep the home fires burning, you just have to keep yours eyes open and have saws and a means of collecting it. Freecycle is often a good source of trees and roof timbers, many items come on pallets, etc.

[Mrcheerful]

only on the delivery charge.

[polygonum]

I would guess not correct.

1. Solid fuels

7.1 What supplies are taxed at the reduced rate?

The reduced VAT rate applies to supplies of coal, coke and other solid combustible materials for a qualifying use (see Section 3) provided:

you hold them out for sale solely as fuel, and they are offered in a form and at a price that is compatible with their being sold as fuel.

7.1.1 Supplies of small - de minimis - quantities

A supply of one tonne or less of domestic grade coal or coke that you hold out for sale as domestic fuel is taxed at the reduced rate. The weight limit of one tonne applies to the total delivered weight of all types of such coal or coke you supply at any one time, not to the weight of supplies of individual products, such as lignite, anthracite.

7.1.2 Wood, peat and charcoal

A supply of wood, peat or charcoal that you hold out for sale solely as fuel qualifies for the reduced rate provided that your customer does not intend to resell it. This applies regardless of the amount you supply.

7.1.3 Firewood

Ready-cut pieces of wood of a size suitable for use as fuel - such as logs, short waste ends or damaged timber - are standard-rated if not held out for sale specifically as firewood.

'Held out for sale' as fuel means that you advertise and otherwise describe the product at its point of sale as fuel or firewood, and that this is consistent with the packaging and wrapping in which you supply it.

[Ian Jackson]

I certainly don't have to collect my annual 2000 litres of central heating oil in order to get the VAT reduced to 5%.

[Mel Rowing]

Fair enough! that involves getting permission!

As a kid I knew a bloke who used to recover driftwood from the river that flowed past his cottage. You could see him any summer evening or weekend throwing a home made grappling hook over whatever came down, trees branches or whatever. He uses to stack it in his yard to dry out before cutting it up for his winter fuel. He did a good line in scaffold planks too. These he would stack separately and from time to time somebody would go along sort one or two out from his stock a few bob would change hands and Bob's your uncle.

[harry]

They are crooks. They obviously intend to keep the money themselves. They may even be too small to be VAT registered.

Fraud. Threaten to report them to the tax man. Or go somewhere else.

All my firewood is free. A good source is any place where stuff is delivered on pallets. They often give them away. You often see scrap wood in skips.

[Obadiah Binks]

Then again you can't trundle down to the local shop and pick up your

2000 litres of fuel