A Standard Industry Classification (SIC) code is used by the Office of National Statistics (ONS)to describe your company’s primary business activity. These codes help categorise businesses into specific industries for various regulatory and statistical purposes. The SIC codes are organised into Divisions, each further divided into classes and sub-classes.

For the water industry, the relevant VAT rules refer to the 1980 SIC code list. Although updated versions of the SIC list exist (from 1992, 1997, and 2007), the 1980 list remains the reference for VAT purposes. If your company files an annual return with Companies House , you’re required to report up to four SIC codes representing your business activities, with the primary code determining VAT obligations on water supplied.

If you run an unincorporated business and haven’t determined your primary SIC code before, you can use the 1980 SIC list and additional resources from the ONS to find the correct code.

When opening a business account, we need your primary SIC code to determine if VAT should be applied to your water charges. VAT is mandatory if your main industrial activity falls within Divisions 1 to 5 of the 1980 SIC code list.

During account setup, you’ll be asked to declare your SIC code, confirming that your business’s primary activity is outside Divisions 1 to 5, enabling us to apply VAT zero-rating to your water bills. If we can’t determine your business’s activity from the provided information, we may need to contact you for further details. Without a suitable SIC code declaration, we will apply VAT to your water bill.

If you believe VAT Is being incorrectly charged (or not charged) based on your business activities, please contact us for help.

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Businesses are required to obtain trade effluent consent if they discharge trade effluent into public sewers or if they dispose of contaminated liquid waste (non-domestic) into sinks or toilets. Surface water run-off from contaminated surfaces being discharged into public sewers also requires trade effluent consent.

It is important to note that even if your trade effluent discharge is expected to be temporary, such as during construction works, you are still required to arrange for trade effluent consent.

If there are any changes to your trade effluent, such as changes in volume or composition, it is crucial to inform your water supplier promptly. This ensures that a new consent framework can be established, preventing any potential penalties or fines.

Trade effluent needs to be regulated for several important reasons. Firstly, many commercial and industrial processes involve the use of chemicals that can be hazardous, corrosive, or otherwise harmful to the environment and public health. Without proper regulation, the discharge of trade effluent could result in contamination of water bodies, soil, and ecosystems. Regulating trade effluent helps to ensure that potentially harmful substances are controlled and treated appropriately before being released into the environment.

Secondly, the sewerage system and wastewater treatment facilities are designed to handle specific types and volumes of wastewater. Trade effluent with high levels of certain substances, such as fats, oils, or chemicals, can overload the treatment processes and infrastructure, leading to inefficiencies, malfunctions, and increased costs. By regulating trade effluent, standards and limits on the composition and volume of effluent can be set to protect the integrity and functionality of the sewerage system.

Additionally, regulating trade effluent enables authorities to monitor and enforce compliance with environmental standards and regulations. This helps to prevent illegal or unauthorised discharges that could harm the environment or undermine the proper functioning of the wastewater treatment system.

Trade effluent regulation promotes sustainability and responsible resource management. By regulating the disposal and treatment of trade effluent, it encourages businesses to adopt more efficient and sustainable practices. This can include implementing water conservation measures, optimising processes to minimise effluent generation, and exploring opportunities for recycling or reusing wastewater.

Trade effluent is regulated by several entities, each with specific roles and responsibilities. The key regulatory bodies involved in overseeing trade effluent regulations in the UK are:

• Environment Agency (EA): the EA is responsible for enforcing environmental regulations and managing the impact of trade effluent on the environment. They issue permits and consents, conduct inspections, and monitor compliance with trade effluent regulations.
• Water and Sewerage Companies (WaSCS): the water and sewerage companies, also known as water suppliers or wholesalers, play a role in regulating trade effluent within their respective areas of operation. They manage trade effluent consent applications, determine charges, and provide guidance to businesses on compliance.
• Ofwat: Ofwat is the economic regulator of the water and wastewater industry in England and Wales. They oversee the pricing, performance, and service standards of water and sewerage companies, ensuring that trade effluent regulation is appropriately implemented.
• Scottish Environmental Protection Agency (SEPA): In Scotland, SEPA takes on a similar role to the EA. They are responsible for regulating and monitoring trade effluent to protect the environment and public health in Scotland.

These regulatory bodies work together to ensure that businesses comply with trade effluent regulations, obtain necessary consents, and operate in an environmentally responsible manner. They provide guidance, enforce compliance, and handle any complaints or issues related to trade effluent management.

The cost of trade effluent varies depending on various factors, including the volume and composition of the effluent, the region in which your business operates, and the specific tariff structure set by the water and wastewater retail provider.

Relevant Industrial Activities are those listed under Divisions 1 to 5 of the 1980 Standard Industrial Classification (SIC) list:

These activities, including mining, quarrying, and various manufacturing and construction industries, must pay VAT on their water supply. If your business’s primary activity is classified under Divisions 0 or 6 to 9, you do not need to pay VAT on water.

For more detailed information, including a conversion table between 1980 and 2007 SIC codes, please refer to the HMRC  VAT water and sewerage services manual. 

VAT is not charged on water supplied to domestic and non-industrial business customers, as these supplies are zero-rated. However, if your business is classified as engaging in a Relevant Industrial Activity, VAT must be added to your water bill.

Typically, the disposal and treatment of sewerage and wastewater are zero-rated for VAT. Therefore, VAT may only be applied to the water supply portion of your bill if you engage in a Relevant Industrial Activity.

VAT (Value Added Tax) is a tax applied to the sale of goods and services in the UK. The standard VAT rate is currently 20%, though some goods and services are subject to reduced or zero rates or are exempt from VAT altogether.

FOG (fats, oils, and greases) found in the wastewater of commercial kitchens can cause sewer problems, if not disposed of properly. Businesses like restaurants, caterers, and takeaways are legally obligated to handle their FOG appropriately to prevent the formation of fatbergs – large clumps of solidified fat that can clog sewers.

Considering FOG disposal is important because it not only prevents damage to sewer networks, but also benefits your business. Mishandling FOG can lead to flooding, road closures, supply disruptions, and potential business closures during the clearing process, which can take weeks. Wholesalers spend millions of pounds annually on clearing blockages alone.

Moreover, fatbergs can cause toxic waste overflow into the environment, hampering sustainability efforts. By disposing of fats, oils, and greases correctly, businesses contribute to a cleaner environment and a more sustainable approach.

To prevent FOG from entering sewers and forming fatbergs, businesses can follow these simple steps:

• Place cooled FOG in a container and dispose of it through registered waste collection services instead of pouring it down the sink while washing up. For those interested in selling FOG, reach out to your wholesaler for more information
  
  
• Prior to washing, use a paper towel or cloth to remove excess fats and discard them in the bin
  
  
• Use sink strainers to capture food scraps, preventing them from contributing to blockages
  
  
• Consider installing equipment like grease traps inside or outside the property to collect FOG before it reaches the sewer. These devices are effective in managing FOG and reducing the risk of blockages.