The VAT which you pay on heating oil is controlled by HMRC. Oil suppliers and brokers are required to be a Registered Dealer in Controlled Oils (RDCO).
Registered Dealers in Controlled Oils (RDCO)
The RDCO use a fit and proper test which ensures that companies which sell fuel are fit and proper to deal in controlled oils and will do so in a way that helps HMRC protect the tax system.
This means that HMRC must be sure the business is genuine, and that they will supply the controlled oils responsibly, legally and only to customers with a legitimate use for them.
They also ensure that all persons with an important role or interest in the business are law abiding, responsible, and qualified.
Each month, RDCO companies will complete a return to HMRC detailing sales which they have completed in the preceeding month and declaring if any of these are of a commercial nature.
If you use heating oil or gas oil (red diesel) to heat a domestic property, the VAT will be charged at 5%. If you order 2,300 litres+ for a domestic property, we may ask you to sign a VAT Declaration of Use form.
Definition of ‘domestic supplies’
Supplies are for domestic use only if they’re for use in a dwelling or certain types of residential accommodation (excluding hospitals, prisons or similar institutions, hotels or inns or similar establishments). Examples are:
(a) armed forces residential accommodation
(c) children’s homes
(d) homes providing care for:
the elderly or disabled
people with a past or present dependence on alcohol or drugs
people with a past or present mental disorder
(f) houses, flats or other dwellings
(h) institutions that are the sole or main residence of at least 90% of their residents
(i) monasteries, nunneries and similar religious communities
(j) school and university residential accommodation for students or pupils, and
(k) self catering holiday accommodation
If you use heating oil or gas oil (red diesel) to heat a commercial property, the VAT will be charged at 5% for orders up to 2,300 litres. For commercial orders over 2,300 litres, the rate moves to 20%.
If you are unsure whether to pay the commercial or domestic rate, please give our team a call on 028 9083 4055 and we’ll be happy to help you.