A few weeks ago the government announced a temporary cut in the VAT rate from 20% to 5% for certain supplies of hospitality, hotel, holiday accommodation and admission to certain attractions. The changes took effect from 15 July 2020 and should last until 12 January 2021.
The following supplies now benefit from the temporary 5% reduced rate of VAT:
These are the headline rules but there may well be some businesses which do not appreciate that they fall within this favourable net and so it is well worth considering the detail.
The detailed rules from HMRC can be seen on the following link (and following the links therein):
I was surprised to see the generous breadth of ‘holiday accommodation’ here and anecdotally I know of at least one case where a client wrongly concluded that they didn’t qualify for the reduced rate. For example:
This is one more example where Covid-19 rules seem quite broad and generous. It is well worth scrutinising whether a particular business qualifies and whether there is scope to make it do so if it doesn’t quite fit the definitions. It also strikes me that there will be scope for some interesting Summer 2021 deals as the 5% rate period draws to an end (on 12 January 2021) if the VAT point can be triggered before that date. Perhaps this will be the subject of a future Tax Bite………..
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