Last week, Rishi Sunak announced a whole host of measures to help boost the economy as we start to recover from the effects of the last few months. One of these measures is a temporary 15% cut to the rate of the VAT applied to certain supplies made in the hospitality, accommodation and tourism industry, from 20% to just 5%.
What supplies does the reduction apply to?
From 15 July 2020 until 12 January 2021, this temporary reduction will apply to businesses who are VAT registered and supply the following:
- food and non-alcoholic beverages sold for on-premises consumption (e.g. 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 the following attractions:
- theatres
- circuses
- fairs
- amusement parks
- concerts
- museums
- zoos
- cinemas
- exhibitions
- similar cultural events and facilities
All appears to be straightforward until you start to look more closely at the detail and you begin to see how the measure could lead to misinterpretation and innocent errors being made by taxpayers.
What should I do if I think this will affect me?
As the rules are fairly complex for what supplies are and are not covered in the reduction and are so open to misinterpretation, we would suggest contacting our VAT specialist, Jessica Mason. She will be able to evaluate your individual circumstances and advise you on how to proceed. You can contact Jessica on 01926 422292 or email [email protected]
