Dies anyone have any suggestions on how to deal with the cross over points for VAT on hotel deposits and sales. If you have applied 20% VAT on a deposit at point if receipt but at the date the guest arrives how do you handle it when the VAT rate is then only 5%. The deposits are generally held as a liability and only transferred to income at the booked date. This query will again be raised when the rates once again increase to 20%.
One other question, if the depoist is fully refundable do you have to report for VAT at the time the deposit is received or when the guest actually arrives?
Hello - as far as I am aware it is the VAT rate applicable at the 'tax-point' date which applies. Here is a link to HMRC which defines 'tax-point'.
I hope this helps
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