HMRC to appeal EV charging 5% VAT ruling

Sara White, Editor, Business & Accountancy Daily. Croner.

Following loss at First Tier Tribunal, HMRC lodges appeal against decision on application of reduced rate VAT on community electric vehicle charging business.

HMRC has applied for permission to appeal against the decision of the First Tier Tribunal (FTT) following loss of case against Charge My Street earlier this year.

The tax authority disputes the tribunal’s decision that Charge My Street was correct to charge 5% reduced VAT rate on its supplies of electric vehicle charging.

In the February judgment, the FTT found that Charge My Street’s model of providing accessible, community-based EV charging in public spaces met the criteria for the reduced VAT rate that applies to domestic electricity supplies.

The ruling overturned HMRC’s decision that had required charge point operators to charge the full 20% VAT.

At the time, the judge ruled the community based electric vehicle charger could pay reduced rate VAT, saying breach of fiscal neutrality was ‘stark’.

The tribunal ruled in favour of the appellant’s argument that the reduced rate of 5% VAT was applicable as set out in Note 5(g) of Item 1, Group 1, Schedule 7A of the Value Added Taxes Act 1994 (VATA 1994).

When the decision was released, an HMRC spokesperson said: ‘We are carefully considering the decision and our next steps.’

Pending approval by the appeals tribunal, the case will be heading back to the Upper Tribunal, although Charge My Street indicated that HMRC is only planning to appeal one aspect of the decision.

Reacting to the decision to appeal, Daniel Heery, director at Charge My Street, said: ‘HMRC has informed us that they are seeking permission to appeal against the First-tier Tribunal judgment. If HMRC are given permission, we expect the Upper Tribunal to hear the case in due course.’

Dr Will Maden, director at Charge My Street, said: ‘We welcomed the judgment that Charge My Street’s supplies of EV charging in public places were subject to the reduced 5% rate of VAT. HMRC are only seeking to appeal against one aspect of the judgment and we look forward to the Upper Tribunal’s consideration of our case.’