When the Chancellor announced a temporary cut in the rate of VAT for the hospitality sector and attractions in his Summer Statement on 8 July there were a number of areas that needed clarification. The reduction applies to supplies made between 15 July 2020 and 12 January 2021. HMRC have now set out more details of which supplies will attract the 5% temporary rate as well as the impact on invoicing, deposits and the flat rate scheme.
WHAT DOES THE 5% TEMPORARY VAT RATE APPLY TO?
The temporary 5% rate applies to the following supplies, but is not an exhaustive list:
- Catering, including hot takeaway food
- Accommodation in hotels, guest houses and similar places
- Tourist attractions such as theme parks, zoos, theatres and cinemas
Note that as far as catering is concerned, the 5% rate only applies to food and non-alcoholic drinks. The 20% rate continues to apply to alcoholic drinks.
Please contact us if you are unsure as to whether the 5% rate applies to any of your supplies.