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

[Harry Davis]

McKevvy wrote in news: [e-mail]:

I emailed local trading standards, but got an email back telling me they don't handle "consumer complaints" and to contact 'Consumer Advice' (nationally) with any such complaint, but that they'd get back to me within so many days if I was a business customer (!)

Also emailed HMRC, and got an acknowledgement. Charging too much VAT (so long as it gets paid to the HMRC) doesn't seem to be within their stated definition of tax fraud, but I am hoping they will be interested, because as someone said, it's as if a company were charging 30% for VAT, or 20% on food. Incidentally, the company operates in the name of the guy who runs it, who claims a string of qualifications and professional memberships in the arborical world, so one would have thought he should know about VAT.

Harry

[Harry Davis]

McKevvy wrote in news: [e-mail]:

I've never used a chainsaw before. What protection and attitude would you recommend to a novice user?

Harry

[Steve Firth]

It depends what you use the engine for. I have a standby gneerator used to provide power during outages. I run that on CH fuel which is taxed at

5%. That is legal use of CH fuel. If ICBA to turn the generator into a CHP unit then I could use it instead of a CH boiler and thhe use of CH fuel would still be legal.

It's only if the engine is in a vehicle that the use of CH fuel becomes illegal.

I suspect it's illegal even if the vehicle is only used on private land since red diesel is taxed at a higher rate than CH fuel.

[harry]

There is VAT on road fuel plus a lot more. Non road fuel diesel/35secoil is dyed red.

[Alex Heney]

And he almost certainly does.

And is almost certainly acting correctly.

Unless he is holding it out for sale *specifically* as firewood *and* is selling it ready prepared for use as firewood, then he is correct to charge the full rate of VAT, regardless of what you will actually use it for.

[Alex Heney]

Don't use "Texas Chainsaw Massacre" as a model :)

Seriously, most of it is just common sense.

Be aware it is moving very fast, and can kick back or if you aren't careful can throw the logs.

So don't start cutting with anybody standing within about 15 feet in front of the chainsaw, and hold it slightly to one side, so if you do get a kick back, it will go over your shoulder rather than over your neck. Although taking care should prevent kickbacks anyhow - they mainly happen when the "nose" of the chain touches something - you should be cutting fairly close to the body of the saw, not with the nose.

Whenever you are not actually cutting, engage the brake.

And NEVER let a moving chain touch dirt - that will blunt the chain faster than anything else you could do.

[Alex Heney]

Indeed they are.

A quick search on their site for "firewood" bring up this link

that, sections 7.1.2 & 7.1.3 are the relevant ones here:

===================================

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. =====================================

So unsawn and unsplit logs are just not going to qualify.

[Alex Heney]

Why would you think that, given that from what the OP described, namely logs that he would saw and split himself, they *should* be charging 20%.

[Peter Crosland]

Emails in such a situation are a waste of time. If you want action to be taken you need to write a letter and send it by recorded delivery with a copy to your MP.

[polygonum]

> Within that, sections 7.1.2 & 7.1.3 are the relevant ones here:

As I read it, they qualify under 7.1.2, don't they? They are, after all, wood! So long as they are held out for sale solely as fuel.

[Harry Davis]

Alex Heney wrote in news: [e-mail]:

On the company's website, they say they are selling split logs ready for burning on woodburning stoves. But surely if I buy an unsplit log and split it myself for burning as domestic fuel, all the taxable value has been added to it before I get hold of it, and I should pay 5% VAT only.

N

[Harry Davis]

Alex Heney wrote in news: [e-mail]:

I don't know how you work that one out. They come under 7.1.2.

See also 7.1.4, which gives examples of items rated at 5% when held out for sale as fuel and supplied for use solely as fuel. These include "wood logs", which are even listed separately from "firewood", presumably to underline that "wood logs" may need sawing and splitting.

7.2 then gives examples of items which are always rated at 20%. These include "forestry thinnings for fencing or staking" and "standing trees".

Harry

[Fredxx]

What you need to do is set yourself up as a non-profit company selling firewood. Self employed would result in less paperwork.

Register for VAT.

Buy wood and have it transported to your home.

Reclaim 20% VAT from HMRC.

Sell the wood to yourself or wife and charge 5% VAT.

Give HMRC the 5% VAT.

One VAT return each quarter, probably a nil return for the Summer quarter!

Easy!!

[Man at B&Q]

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You also ned to read the final paragraph for the definition of 'held out for sale'.

So unsawn and unsplit logs are just not going to qualify.

MBQ

[fred]

Ask him for a VAT receipt. His VAT number will be on it, Send a copy to HMR= C. As long as he is paying over all the vat he collects they likely wont gi= ve a monkeys.

If you are vat registered you are entitle to claim back vat paid even if it= is at the wrong rate.

[Alex Heney]

You may think it *should* be that way.

But that isn't what HMRC say.

It must be held out for sale *purely* as firewood, and it must be prepared in such a way as to match the description of it as firewood, otherwise standard rate VAT must be charged.

[Alex Heney]

>>> Within that, sections 7.1.2 & 7.1.3 are the relevant ones here: >>

No.

The final paragraph applies to both the previous ones.

It has to be in a state consistent with being "firewood".

[Alex Heney]

I work that out by the final paragraph quoted, which applies to *both* of the numbered paragraphs.

[Dave Liquorice]

Why? "describe the product at its point of sale as fuel or firewood" provided that is fullfilled then the applicable rate of VAT is 5%.

I guess one could argue that "packaging and wrapping" implies something but what? Our logs come in plain dumpy bags nothing to say they are "fuel" or "firewood", though they are sawn and split with 5% VAT. Should I pay 20% VAT on the logs included that aren't split? Should I be paying

20% VAT because the "packaging" is plain?

[polygonum]

>>>>> Within that, sections 7.1.2 & 7.1.3 are the relevant ones here: >>>

If all that is required is splitting, then I contend it is perfectly reasonable and consistent. There really are not that many uses for short pieces of tree trunk that have not been carefully prepared, evenly and properly seasoned, etc.

We can disagree about this. But that just emphasises that there is no cut and dried answer short of getting an HMRC ruling.