Where applicable, and subject to Regulations of HM Customs and Excise, charges may be liable to VAT.
Where applicable VAT is always charged on the services used in connection with a relevant industrial activity. A relevant industrial activity is defined as those in Divisions 1 to 5 of the Standard Industrial Classification (SIC) 1980:
Division 1
Energy and water supply industries.
Division 2
Extraction of minerals and ores other than fuels; manufacture of metal, mineral products and chemicals.
Division 3
Metal goods, engineering and vehicle industries.
Division 4
Other manufacturing industries.
Division 5
Construction.
Where the services provided to the customer are for both relevant industrial activity and other purposes, VAT is chargeable if the relevant industrial activity of the customer is the predominant activity.
An exception to the above applies where a predominantly relevant industrial customer has more than one business activity. Where a secondary activity is non-industrial and exempt from VAT (under UK VAT law) then provided the exempt activity is not the predominant activity, water supplied to the exempt business activity may be zero-rated. For zero-rating to be applied it must be possible to separately identify that supply of water.
Further information
Our scheme of charges
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