The VAT team at Saffery Champness has produced responses to a series of FAQs that will help many rural and other businesses get it right when it comes to adjusting to the VAT changes announced by the Chancellor in his recent summer statement.
In his statement, the Chancellor announced a temporary reduction in the VAT rate for certainly supplies of food and drink, hospitality, holiday accommodation and visitor attractions, to 5%.
The FAQs cover the changes, the supplies to which they apply, and retaining or passing those savings on to the consumer. There is guidance included relating to catering, holiday accommodation, caravans and camping pitches, admission charges to attractions, and the treatment of deposits and vouchers, all of which will be of relevance to many diversified rural businesses.
Roger Wareham, Partner, Saffery Champness and a member of the firm’s Landed Estates and Rural Business Group says:
“Whilst the changes seem relatively straightforward, once you dig into the detail, there are numerous complex areas that we hope our FAQ sheet will address. For example, how are different supplies of food and drink affected, what to do when there is a single supply with different elements, such as wedding packages, and timing of deposits paid and accommodation stays.
“Businesses need to consider also whether, if the rate change applies, they are going to pass it on to customers. It’s a tough decision as the measure is aimed at assisting the hospitality sector by reducing tax payable. Whether businesses decide to refund VAT already paid on a VAT inclusive price, or to reduce prices going forward to reflect the lower VAT rate is a commercial decision for them to make.”
The VAT FAQs can be found at: https://www.saffery.com/news-and-events/publications/vat-measures-announced-in-the-july-2020-fiscal-statement
About Saffery Champness LLP
Saffery Champness LLP is a firm of chartered accountants that advises individuals and families, not-for-profit organisations and businesses across a range of sectors. As a member of Nexia International, it is part of a worldwide network of independent accounting and consulting firms.
For over 160 years, the firm’s success has been founded upon providing clients with a genuinely partner-led service and working with them to create bespoke solutions that help them to achieve their personal and business objectives. For more information visit www.saffery.com or see Twitter @Safferys