Don’t have a FIT

What is the VAT treatment of feed in tariffs (FITs)? There are two types: generation FITs applying to electricity used by the producer; and export FITs applying to electricity supplied to the National Grid.

Export FITs give a predetermined rate for the sale of electricity to the grid. It would seem to follow that for VAT purposes export FITs – when received by a VAT-registered trader – are a standard-rated supply.

The level of FITs is set down in regulations but these seem to be silent on VAT. Are the published FIT rates to be taken as being VAT inclusive or VAT exclusive?

The position of generation FITs is less clear. They would appear to be a subsidy which would suggest that these represent supplies outside the scope of VAT. Is this the accepted view?

A VAT business should be able to recover part...