In King and others v Residential Marine [2021] UKUT 0309 (LC), the Upper Tribunal (Lands Chamber) has determined that the climate change levy should not be included in electricity bills payable by residential leaseholders.
Port Werburgh Marina is a residential and leisure marina on the banks of the River Medway in Kent. The complex includes a protected mobile home park to which the Mobile Homes Act 1983 applies.
The appellants were owners of permanent mobile homes situated on pitches on the park. The respondents were the owners of the marina. The appellants each occupied their pitches pursuant to an agreement made between them and the respondent. The Act applies to each of these agreements.
Pursuant to section 4 of the Act, the appellants, in June 2020, applied to the First-tier Tribunal for the determination of a number of issues concerning charges for water, sewerage, electricity and about the exercise of various rights under their agreements. When the application was heard by the FTT the only issue in dispute was in relation to electricity charges.
A question that arose in respect of the provision of electricity for the residential leaseholders of the park concerned whether the respondent, as a reseller of electricity, could pass on the costs of the climate change levy to the appellants. Relying on the guidance on the resale of gas and electricity provided by Ofgem, HMRC’s Excise Note CCL1/3 and MacGregor v BM Samuels Finance Group [2013] UKUT 471 (LC), the appellants argued that the levy was a charge on business consumers and should not be passed onto domestic customers. The FTT disagreed.
The FTT held that the Ofgem guidance was not definitive. Further, the appellant’s use of HMRC’s Excise Note was “both out of context and misleading”. The FTT found that the Excise Note was “for energy consumers in the business and public sectors … [and] it was clearly not intended to relate to the [appellants] who purchase electricity from the respondent as a reseller”. The appellants appealed this finding.
On appeal, the UT observed that the Ofgem guidance was unequivocal. The climate change levy could not be passed on to residential consumers of electricity.
Relying on MacGregor and East Tower Apartments v No.1 West India Quay (Residential) [2016] UKUT 553 (LC), the UT additionally found that regardless of whether a development was mixed use or purely residential in nature, the climate change levy should not be included in the energy bills of residential tenants. This was underscored by HMRC’s Excise Note at paragraph 2.8, which provided that in respect of “mixed use” premises, “where supplies are made to a customer whose premises are put partly to domestic use, the whole supply can be treated as domestic if the domestic use is at least 60% of the total. If the domestic use is less than 60% of the total “the main rate of CCL must be applied to that portion that does not qualify for relief”.
Elizabeth Dwomoh is a barrister at Lamb Chambers
