The recent government announcement of the introduction of a temporary rate on VAT seeks to stimulate the hospitality industry, with a cut in the VAT rate from 20% to 5% on certain supplies, until 12 January 2021. However, the legislation issued – and accompanying guidance – is somewhat brief and lacks the detail to assure affected tax payers as to whether or not they are complying correctly with these latest changes.
While what is not covered by the temporary 5% rate in some cases is clear, including for the sale of alcoholic drinks, much remains unclear.
This briefing highlights some of those areas of confusion, and offer some thought processes based on conversations we have been having with our clients.
You need to ensure that your supply not only qualifies for the 5% to apply, but also to take the commercial decision as to whether you pass on any such savings to the final consumer.
Not all catering is covered by the temporary 5% reduced rating.
The supply of hotel and similar rooms ought to be clear cut and within the 5% rate but there are exceptions, as hotels and other establishments do not just provide rooms.
This is where there appears to be most uncertainty on what attractions are covered at 5%.
Vouchers have a different tax point depending on whether they are ‘single’ or ‘multi-purpose’ and are not covered by the special provisions.
We are running a live webinar on Thursday 13 August 2020 to discuss these 5% uncertainties in further detail. You can register here, and submit questions in advance so that we can ensure all queries and areas of concern are covered.
Please do not hesitate to contact Robert Warne below, or your usual VAT contact, if you require any assistance.
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