HMRC has a guidance page on the temporary reduced rate of VAT for hospitality, holiday accommodation and admission to certain attractions. The page can give the wrong impression, so here is the short version: the reduced rate has ended.
What has changed
The reduced rate was brought in during the coronavirus pandemic to support businesses hit by closures and social distancing. It applied to supplies made between 15 July 2020 and 31 March 2022. From 1 April 2022, the normal VAT rules apply and VAT should be charged at the standard rate.
For accounting purposes, the rates were:
- 5% from 15 July 2020 to 30 September 2021
- 12.5% from 1 October 2021 to 31 March 2022
Who it affects
VAT registered businesses that supply any of the following:
- Food and non-alcoholic drinks eaten on the premises, such as restaurants, cafés and pubs
- Hot takeaway food and hot takeaway non-alcoholic drinks
- Hotel and holiday accommodation, including caravan and tent pitches
- Admission to certain attractions
HMRC says food and non-alcoholic drinks eaten on your premises should now be charged at the standard rate of 20%.
What you need to do
If you are charging the standard rate on these supplies today, you do not need to do anything new.
It is worth checking your records if you:
- Used the Flat Rate Scheme or the Tour Operators Margin Scheme during the reduced rate period
- Took payments or issued invoices before 15 July 2020 for supplies made on or after that date
- Changed a retail scheme or catering adaptation during the period
HMRC says that if you changed a scheme, you should keep your workings as part of your business records. Any changes should have been reversed once the period ended.
HMRC's guidance points to VAT Notices 709/1, 709/3, 709/5, 727 and 700 for the detail.
If you would like help checking your VAT position or your past records, please contact Oval Accountants.
Written by the team at Oval Accountants in Burgess Hill. If you're not sure how this affects you, ask us or call 01444 716592.
