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HMRC internal manual

VAT Fuel and Power

Free coal to miners

Under a scheme administered by the National Concessionary Fuel Office (NCFO) on behalf of the Department of Energy and Climate Change (DECC), ex-employees of the British Coal Corporation (BCC) and their dependants are entitled to receive an entitlement of solid fuel or a cash allowance, provided that they meet the criteria of the qualifying agreement.

These supplies of free coal are subject to the normal rules for gifts of goods. As they form part of a series or succession of gifts, from time to time, to the same person, they are deemed to be supplies of goods, even though they are provided free of charge. VAT is payable at the reduced rate on their open market value.

The cash payments received by the miners and their dependents are not liable to VAT.