The temporary 5% VAT rate for qualifying children's meals, children's admissions and certain family attractions comes to an end on 1 September 2026. Those organisations that invested time on their customer communications and systems changes to apply the reduced rate correctly, will now need to ensure that the transition back to normal VAT rates is handled with an equal amount of care.
In our experience, while much of the attention has focused on implementing the reduced rate, experience shows that the period immediately before and after a temporary VAT change can often present the greatest compliance risk. Errors in point-of-sale systems, inconsistencies in pricing structures and confusion around advance bookings can all result in organisations either underpaying or overpaying VAT.
Organisations in the hospitality, leisure and attractions sectors should consider five key areas
- Check your systems
Ensure tills, booking systems and finance software are ready to revert to the correct VAT treatment from 1 September. System errors are one of the main risks identified by HMRC. - Review advance bookings
Bookings, admissions and packages sold before 1 September but taking place afterwards may require special attention. Organisations should check that VAT has been accounted for correctly on advance payments and prepayments. - Revisit package deals
Family tickets, children's meal deals, party packages and promotional offers can create additional VAT complexity. Where a package contains different elements, the VAT treatment should be reviewed to ensure any apportionment remains fair and reasonable. - Confirm intermediary arrangements
Where tickets or admissions are sold through agents, online platforms or tour operators, organisations should ensure that all parties have applied the temporary relief consistently and that arrangements will revert correctly after the relief ends. - Keep an audit trail
Organisations should retain evidence of the decisions, system changes and controls implemented during the temporary relief period. Strong governance and documented VAT controls remain an increasing area of focus for HMRC. Ultimately, VAT is a self-assessed tax so it is always recommended to keep a record of the decisions you have made and the reasons for them.
In summary
The end of the summer VAT relief provides a useful reminder that VAT risk often arises not from the tax rules themselves, but from systems, processes and implementation. A short review now could help identify issues before they later become reasons for costly corrections or HMRC scrutiny.
For further guidance on the above, please get in touch with your usual Crowe contact.
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