Accounting Firms

Saffery Champness forewarns of changes to VAT

The company is advising businesses to be alert to the changes coming on the reduced VAT rate from 1 October

Saffery Champness is advising businesses that provide accommodation services or catering, and those operating in the wider hospitality sector to be alert to the changes coming on the reduced VAT rate from 1 October.

 In the 2021 Budget, the chancellor advised that the temporary 5% reduced rate of VAT would be extended to September 2021, but that this would be replaced by a new rate of 12.5% that will remain in place until 31 March 2022.

Saffery Champness has said businesses “need to consider the impact this can have on their VAT accounting”. 

If advance payments are taken between 1 October 2021 and 31 March 2022, those payments will be subject to 12.5% VAT even if the accommodation for example is being booked for a period after 31 March 2022.

Nick Hart, VAT director at Saffery Champness, said: “A great many businesses have benefited from the 5% VAT rate, but they should now be looking ahead to that increasing to 12.5% from 1 October. 

“For businesses taking advance bookings for accommodation, catering events and admission to attractions for example, the collection of advance payments and deposits ahead of the rate changes on 1 October 2021 and 1 April 2022 (when the rate is due to revert back to 20%) could provide VAT savings.”

Back to top button