Temporary hospitality and tourism VAT cut: More details revealed

The government has released more details about the temporary VAT cut announced for hospitality and tourism in response to the massive impact of Covid-19 on businesses in the sectors.

The temporary five per cent rate revealed by Chancellor Rishi Sunak will apply to certain supplies relating to hospitality, hotel and holiday accommodation as well as admission to some attractions.

The taxman says that it will cover supplies that are made between July 15 and January 12, 2021.

HMRC’s guidance also confirms that this reduced rate will apply to the supply of:

• food and non-alcoholic beverages for consumption on premises, for example, in a restaurant, café or pub
• hot takeaway food and hot takeaway non-alcoholic drinks

More information about how these changes apply can be found here:

https://www.gov.uk/guidance/catering-takeaway-food-and-vat-notice-7091

Hotel and holiday accommodation businesses will also benefit from the temporary reduced rate if they:

• supply sleeping accommodation in a hotel or similar establishment
• offer holiday accommodation
• charge fees for caravan pitches and associated facilities
• charge fees for tent pitches or camping facilities

More information about how these changes apply can be found here:

https://www.gov.uk/guidance/hotels-holiday-accommodation-and-vat-notice-7093

The reduce rate also applies to admissions to the attractions that are not already eligible for the cultural VAT exemption, such as theatres, cinemas, circuses, fairs and amusement parks, museums, exhibitions concerts and zoos.

If you are a small business using the Flat Rate Scheme to simplify your VAT calculations you should be aware that certain percentages have been reduced in line with the introduction of the temporary reduced rate of VAT.

The guidelines also give information on accounting for supplies that straddle the temporary reduced rate. There may be situations where businesses receive payments or issue invoices before July 15 for supplies that take place on or after that date.

More information on this can be found here:
https://www.gov.uk/guidance/vat-guide-notice-700#changes-in-tax-rates-and-liability

More details have also been released about how the government’s ‘Eat Out to Help Out’ scheme will operate.

It allows businesses to offer a discount to diners and encourage them to eat at their establishment.

HMRC says business can use the scheme all day, every Monday, Tuesday and Wednesday from August 3 until August 31.

They can offer a 50 per cent discount, up to a maximum of £10 per person, to diners for food or non-alcoholic drinks to eat or drink in.

There is no limit to the number of times customers can use the offer during the period of the scheme.

Customers cannot get a discount for someone who is not eating or drinking and alcohol and service charges are excluded from the offer.

Registration will close on August 31 and you can register if your establishment:

• sells food for immediate consumption on the premises
• provides its own dining area or shares a dining area with another establishment for eat-in meals
• was registered as a food business with the relevant local authority on or before July 7

You cannot register an establishment that only offers takeaway food or drink, catering services for private functions or if you run a hotel that provides room service only. Mobile food vans or trailers are also exempt.

For more details on registration visit:
https://www.gov.uk/guidance/register-your-establishment-for-the-eat-out-to-help-out-scheme?utm_source=0f7cc920-bc77-457f-a288-ad8ab2037c68&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate