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Inclusion of VAT within Charges

31 - Inclusion of VAT within Charges

  • Status Closed
  • Urgent No
  • Synopsis

    DCUSA Clause 19.6.1 states that “All charges payable by or to the User pursuant to this Clause 19 and Clauses 20, 21 or 22: are exclusive of Value Added Tax and the Company shall include with such Charges (and the Payor shall, subject to a valid invoice having been issued, pay) Value Added Tax (if any) at the rate applicable thereto from time to time, and any such Value Added Tax shall be payable at the same time and in the same manner as the amounts to which it relates”.

    The current wording of “shall include with such Charges” may be interpreted as “shall add to”. If the phrase was to include VAT then it should be “shall include within”.

    Therefore under the current wording Charges (defined term) refers to VAT exclusive figures. As a User’s Value At Risk is calculated using Charges then it must be done so using VAT exclusive figures. This is at odds with the current practice of at least 4 DNOs.

    We believe that the wording of this clause is ambiguous and creates confusion as to whether VAT should or should not be included. This causes issues in the calculation of Value At Risk values and may lead to disputes between DNOs and Suppliers in agreeing the correct Credit Cover value.