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Reduced VAT on hotel deposits

  • Fellow
  • Practice Licence
  • 74 posts
  • # 118893

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%. 

 

Thanks

JC

  • Fellow
  • Practice Licence
  • 74 posts
  • # 118895

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?

  • Member PM.Dip
  • Practice Licence
  • 24 posts
  • # 118897

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'.

https://www.gov.uk/vat-record-keeping/time-of-supply-or-tax-point

 

I hope this helps

 

Peter R

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