Many businesses have welcomed the news that the Government will introduce a new scheme to…
HM Revenue & Customs (HMRC) has published guidance on temporary cuts to the rate of VAT from 20 per cent to five per cent from Wednesday 15 July 2020 to 12 January 2021 for certain goods and services in the hospitality and tourism sectors.
The reduced rate was announced by the Chancellor at the Summer Economic Update on 8 July 2020 and applies to:
- food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs
- hot takeaway food and hot takeaway non-alcoholic beverages
- sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities
The reduction also applies to admission to the following attractions, where they do not qualify for the cultural VAT exemption:
- amusement parks
- similar cultural events and facilities.
The guidance informs small businesses that use the Flat Rate Scheme that certain percentages have been reduced in line with the new temporary five per cent rate of VAT.
Further guidelines also set out the arrangements that apply where supplies straddle the temporary reduced rate.