At the car wash

My client operates a car wash franchise which uses various UK properties that are owned by a large retail store and from which the franchisees operate.

Electricity and water are supplied by the store at its various sites to my client who reads the meters each month and sends a quarterly report to the store.

The store invoices my client charging VAT at the standard rate. My client raises individual invoices to the franchisees billing them for their usage again using the standard rate.

The property is owned by the store which also charges a rental fee to my client. He in turn charges a fee to the franchisee. These site rental invoices are raised separately from the electricity and water invoices.

A franchisee has questioned the VAT rate that it is being charged for electricity and water and has asked whether the reduced rate...