Anthony11

Thanks Admin and Jason. The piece of legislation I referred to is this - in particular paragraph 2: https://www.legislation.gov.uk/uksi/2015/1544/regulation/8/made Apologies for referring to it as a fine - I guess it's compensation. I now understand that HMRC would not have a view on this. From the link you sent I guess it would be VATable. But my original question still stands as to whether £30 is should be before or after VAT and the legislation unfortunately is unclear on this. What irks me is their system automatically added £30, and they manually removed it to adjust to £28.57. I know it's loose change, but there's a principle behind it. Thanks again.

There is a piece of legislation that states "If [an energy supplier] fails to meet any individual standard of performance it must, for each such failure, make a payment of £30 to the customer ". Because of such a failure, my electricity supplier, under the "Adjustments before VAT at 5%" section of my bill has credited my account with £28.57 and then applied 5% VAT to make up the remainder. My understanding is that this is effectively using VAT to pay 5% of their fine. Here is my thought process: The legislation says they should pay me £30 (this includes crediting my bill with £30). So let's say my electricity charges were £100. If they credited £30, I'd owe them £100 - 30 = £70 plus £3.5 VAT at 5%, total owed by me £73.5. What they do instead is they credit £28.57, so I owe them £100-28.75 = £71.25 plus £3.57 VAT at 5%, total owed by me £74.82. Does this seem right? I believe they're wrong to do it this way as it saves them money that I end up paying, but would appreciate a sanity check please. Thank you in advance.