A Cumbrian accountant is sharing his five-step guide for businesses which will benefit from a temporary reduction in VAT.
Between June 25th to September 1st, the Government is lowering VAT on certain supplies relating to children and families from 20% to 5% to help more people enjoy the summer months.
The temporary ‘Summer Holiday’ reduction in VAT will apply to businesses operating in the leisure, hospitality and attractions sectors, and those qualified should now be passing on these benefits to customers.
The supplies which qualify for the reduced 5% rate are:
- Children’s meals served in restaurants;
- Children’s and family tickets for cinemas, theatres, concerts, shows and exhibitions;
- Admission tickets for children and adults for attractions including amusement parks, fairs, museums, zoos, soft play centres, circuses, adventure parks, nature reserves, wildlife parks and observation attractions.
Stuart Farrer, a Managing Partner at Cumbria-based Saint & Co Chartered Accountants, is informing businesses across the qualifying sectors of what they are required to do to ensure they are able to provide the discounted prices to the public during this period.
- Update your till and sales systems to apply the 5% VAT rate;
- Review your invoicing processes to reflect this rate reduction wherever possible;
- Take care with mixed supplies – for example some meal deals may include different rates so you will need to ensure VAT is apportioned correctly.
- Plan for the VAT rate to revert back to 20% from 2nd September;
- Get in touch with your accountant to make sure you are fully informed about what changes apply to you.
Stuart said: “The temporary reduction of VAT is intended to benefit consumers over the summer holiday months, as well as businesses who can pass on cheaper costings and therefore potentially appeal to a larger customer base.
“It is a great – albeit brief – opportunity for the qualifying businesses to get more feet through their doors, and they need to make sure everything is in place to avoid missing out and charging for items at the usual VAT rate of 20%.
“It’s important businesses have their till systems adjusted to apply the 5% rate up until September 1st, their invoices during this period reflect this temporary rate and that businesses are aware of exactly what supplies the rate applies to avoid any mistakes in costings.
“Just as important, businesses will need to make sure they revert back to the higher rate on September 2nd to ensure they don’t continue to charge less when items are charged at 20% once again.”
Headquartered in Carlisle, Saint & Co has offices across Cumbria in Ambleside, Cockermouth, Millom, Penrith, Workington and Wigton across Cumbria and in Annan, Castle Douglas and Dumfries in Dumfries & Galloway.
