Working from home and considering a business energy contract?

Most small businesses operating from home will probably claim back any energy they use -  solely and exclusively in the running their business of course -  as a business expense.

However, some business owners may take the view that if only they could buy their energy supplies as a business, surely there must be some desirable tax advantages? Well sometimes there may be. So when an energy broker phones and asks if you would like to have your gas or electricity supplied as a business, you may feel tempted, but we would ask you to exercise extreme caution. Here's why...

1. Business energy tariffs are not particularly any cheaper than domestic tariffs, even if you think that buying through your company gives you a tax advantage.

2. The broker normally earns a commission that will be taken out of the rate that is offered; in other words you will almost certainly not be getting the cheapest rate available on the market.

3. Business contracts are incredibly onerous, especially with regard to the rollover trap and any subsequent deemed contract conditions. If you don't know what these energy industry terms mean then get professional advice as soon as you can; and preferably before entering into any conversation with a broker, or signing up with an energy supplier.

Verbal Contracts

And please note that we have deliberately used the word conversation in the previous paragraph, and not contract. Brokers will often phone you out of the blue and ask if changing to a business supply is of interest? Well, do not be surprised if any positive response is taking as a verbal contract to move and the next thing you know you'll have a letter or email from the broker confirming the arrangements for your transfer. And to compound matters, brokers are currently unregulated, any government agencies appear impotent, and so you have little in the way of comeback or a resolution.

Deemed Contracts

To make matters worse, if you then fail to manage your subsequent business energy contract properly you could find yourself on a deemed contract paying eye-watering rates for your electricity and gas and worse still, for a lengthy period of time.

The financial industry issues a warning with mortgage applications - if you don't keep up with repayments you could even find yourself losing your house as a consequence. We suggest this warning could also apply to anyone looking to sign up for a business energy account for their domestic premises.

Published by the Energy Saving Centre after seeing the problems caused to a number of people's personal lives by underestimating the potential risks of having their home energy supplied on a business contract.