Supplies of water: responsibilities of the supplier
Suppliers of water are responsible for deciding whether their recipients are industrial customers. This responsibility also applies to VAT registered persons who receive supplies of water and supply them onwards to other parties.
The law does not prescribe what evidence is required to support the VAT treatment of charges for water. However, an acceptable way to ensure that the correct rate of VAT is charged is for suppliers to obtain written declarations from their customers confirming their main business activity. Non-industrial users would issue a declaration to the supplier confirming that their activities do not fall within Divisions 1 to 5 of the 1980 Standard Industrial Classification.
Any later VAT adjustments made by water companies who amend the VAT status for water charges from standard rated to zero rated as a result of their customer confirming their SIC code, count as error for VAT purposes. See Notice 700/45 How to correct VAT errors and make adjustments or claims for further details.