Temporary VAT rate now in place until 12 January, 2021

Does the temporary VAT rate cut affect the VAT Flat Rate Scheme?

Yes, it does. The temporary changes mean that some rates covered by the VAT Flat Rate Scheme (FRS) have changed. This enables VAT FRS users to benefit from the temporary reduction in the standard VAT rate as well.

HMRC will update the list of VAT flat rates to show the temporary cut.

Who does the temporary change in VAT affect?

The VAT cut affects VAT registered businesses in certain sectors, and their customers. The government describe it as being for the benefit of:

“Organisations that make supplies of hospitality, hotel and holiday accommodation and admission to certain attractions, and their advisers.”

If you’re VAT registered, and normally charge VAT at the standard rate on the items below this applies to you. If you ‘make a supply’ of the items listed below between 15th July 2020 and 12th January 2021, then you should charge VAT at 5% 

• food or non-alcoholic drinks which are sold and consumed on the premises (restaurants, cafes and pubs, for instance)
• hot takeaway food and non-alcoholic drinks
• sleeping accommodation which includes hotels and B&Bs or similar
• holiday accommodation
• pitch fees for caravans and tents, and associated facilities

Check the HMRC website for more information about the temporary VAT rate for certain items.

www.theaccountancy.co.uk

https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-accommodation-and-attractions#history