VAT: REDUCED RATE FOR HOSPITALITY, HOLIDAY ACCOMMODATION AND ATTRACTIONS
In the Chancellor’s Summer Statement it was announced that a targeted reduced rate of VAT would be introduced aimed at some of the sectors hardest hit by COVID-19 – hospitality and tourism. Such supplies, currently standard rated at 20 percent, will be subject to VAT at five percent. The new rate will apply from Wednesday 15 July 2020 and will run until 12 January 2021.
Its original announcement was on 8 July 2020 allowing VAT registered businesses to apply a temporary 5% reduced rate of VAT to certain supplies relating to:
• hospitality
• hotel and holiday accommodation
• admissions to certain attractions
What supplies are affected?
The 5% rate will apply from 15 July 2020 to 12 January 2021 on the following supplies:
• food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs
• hot takeaway food and hot takeaway non-alcoholic beverages
• sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities
• Admissions to theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities (note that if any of these attractions are covered by the existing cultural exemption, the exemption will take precedence)
In order to further help restaurants, cafés, pubs or other food establishments the Government has also announced a new ‘Eat Out to Help Out’ scheme. This will allow every diner to a 50 percent discount per head on their meal, at any participating establishment.
Retail schemes
Catering businesses using retail schemes may have to alter their accounting systems for the period 15 July 2020 to 12 January 2021. If you have a bespoke retail scheme agreement, you should review it and if you think an alteration is needed, contact your large business Customer Compliance Manager.
See here.
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