Recharge of VAT on Utilities

I am in the unfortunate situation that i am required to bill my landlord for gas and electricity usage for the tenants living above the property i rent for my business, and have recently applied for VAT Registration. We have a single gas and electricity supply for the whole property, the bills are in my name, however the landlord did install submeters so i can bill him directly based on usage. Having read all the documentation, i am still unclear as to if i recharge VAT at 20%. My understanding is, that if i am raising an invoice, to another vat registered business, i would recharge at 20%. However my landlord is disagreeing, stating that i should only charge 5% Vat as that is generally what is charged by the Utility company. I do not want to get this wrong, can anyone advise?

Hi,

Normally it is the position where the landlord has a secondary metre installed and the landlord is billing the tenant for the electricity used.
In this situation the  charges to the tenants for the gas and electricity they use are consideration for separate supplies of fuel and power. These supplies will be standard-rated unless the fuel supplied is of a de-minimis quantity, in which case the supply will be subject to the reduced rate.

So if you as the tenant are charging for the known usage of electricity of another tenant back to the landlord then the liability will also be 20% VAT unless it is of a deminimus quantity where it will be 5%.

Please see below:

Fuel and power (VAT Notice 701/19): 3. Qualifying use

Thank you.