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HMRC internal manual

VAT Fuel and Power

Scope of the reduced rate: qualifying use

The reduced rate is restricted to supplies for qualifying use. The general intention is that it should apply to supplies to final consumers who are not using the fuel for a business purpose. This primarily means domestic consumers and some charity use. The VAT Act 1994 Schedule 7A Group 1 Note 3 reads as follows.

(3) In this Group “qualifying use” means-

(a) domestic use; or

(b) use by a charity otherwise than in the course or furtherance of a business.