Yeah, they'll probably need to do something, one option is to relax the VAT rate. If the question had been asked 12 months ago I'd say not a chance, but this has been an interesting year for government interventions.
Is VAT due when a payment is made or when a service is taken?
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Yeah, they'll probably need to do something, one option is to relax the VAT rate. If the question had been asked 12 months ago I'd say not a chance, but this has been an interesting year for government interventions.
Why are people under the impression the VAT reduction is going to be passed on to you?
The best case scenario is you get an updated invoice with 5% VAT line, the bottom line is staying the same.
Just like a pint will still cost the same next week.
The best case scenario is you get an updated invoice with 5% VAT line, the bottom line is staying the same.
Just like a pint will still cost the same next week.
Exactly. (although alcohol doesn’t benefit from the reduced rate anyway)
The VAT due depends on the invoice date. If it’s been issued to you already, it’s 20%. If it’s still to be issued after the new rate it might be
5% but I would expect your final price to be the same regardless.
The reduced VAT rate is supposed to help these businesses, not reduce consumer costs. Businesses could pass savings on but most wont because that won’t necessarily help them.
Absolutely this. This is a stimulus to keep businesses afloat - not reduce your holibobs costs.
Accommodation is normally priced at XXX per night, not XXX plus VAT, this VAT part is what the suppliers figure into their pricing. This will not change and the suppliers will not reduce their prices.
The suppliers will still price at XXX but the VAT savings are designed to help them recover quicker so it's not getting passed to the consumer.
The suppliers will still price at XXX but the VAT savings are designed to help them recover quicker so it's not getting passed to the consumer.
FYI @mrochester
HMRC has published further guidance on the reduction to VAT:
https://www.gov.uk/guidance/vat-red...lies-that-straddle-the-temporary-reduced-rate
Importantly, suppliers CAN reduce the VAT charged on goods or services where the actual supply is after the reduction to the VAT using standard "special provision" rules.
https://www.gov.uk/guidance/vat-guide-notice-700#changes-in-tax-rates-and-liability
HMRC has published further guidance on the reduction to VAT:
https://www.gov.uk/guidance/vat-red...lies-that-straddle-the-temporary-reduced-rate
Importantly, suppliers CAN reduce the VAT charged on goods or services where the actual supply is after the reduction to the VAT using standard "special provision" rules.
https://www.gov.uk/guidance/vat-guide-notice-700#changes-in-tax-rates-and-liability
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That’s very interesting, thank you.
Soldato
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Having this exact conversation with a place I've booked with over Christmas. The difference is about £500. So far the company letting the property have said they have not worked out what to do. I've paid about a 30% deposit but no invoice has yet been issued.
The have so far said that they have not given it much consideration but believe the relief has been introduced to support businesses hit by COVID. My point is that it is to ensure that during a recession they lower pricing helps ensure full occupancy by reducing the cost to the customer. I was quoted £3800k inclusive of VAT at the time of booking, if they do not pass on the VAT they are in effect changing the price offered after taking a deposit. My logic is that if VAT had been increased the owner would certainly not absorb this and my invoice in November would be at the new higher rate. Frankly this is the position they will be in when they take bookings later this year for next summer and the rate is back to normal.
The have so far said that they have not given it much consideration but believe the relief has been introduced to support businesses hit by COVID. My point is that it is to ensure that during a recession they lower pricing helps ensure full occupancy by reducing the cost to the customer. I was quoted £3800k inclusive of VAT at the time of booking, if they do not pass on the VAT they are in effect changing the price offered after taking a deposit. My logic is that if VAT had been increased the owner would certainly not absorb this and my invoice in November would be at the new higher rate. Frankly this is the position they will be in when they take bookings later this year for next summer and the rate is back to normal.
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I’ve got two holidays happening with the vat reduction period, both of which have been paid in advance. I’ll wait for now to see what the two companies involved do... if anything.
If the companies don't offer to reduce the total to reflect the reduced VAT, or refund VAT you've already paid, will you do anything about it?
Soldato
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Honestly if I see significant price reductions next week I will consider cancelling and booking elsewhere. There were several places that I liked that were a little over our budget but we had agreed collectively a hard fix on the max price. If those places pass on the savings and fall into the budget then I would be happy to change. The fact is that VAT is an end consumer expense, not a business one (in most cases).