reduction in v a t

davesue

we have booked a cruise for the holidays this year and i have just contacted the travel agents to ask about the reduction in v a t.the travel agent thomas cook said they are not giving a reduction as it does not apply on holidays.has anyone else come across this?.

phatbear

So have you paid/booked the holiday, if you booked the holiday when the vat was 17.5% then thats what you will pay.

stephb34

If they'd gone the other way and put vat up to 20% would you have been happy if they'd come and asked you for the extra 2.5%.

bigheadxx

Not necessarily so!!!
From HMRC Guide for VAT registered businesses:

Are there any special rules for sales spanning the change of rate?
Yes. If you have received a payment or issued an invoice before 1 December 2008 for goods that will be provided (or services delivered) after 1 December 2008, you have a choice. You can choose to account for VAT at the new rate of 15% on the amounts already received or invoiced. You don’t need to tell HMRC if you do this. In these circumstances, any payments received or invoices issued after 1 December will always be subject to the new rate of 15%. But you do need to issue a credit note to your customer if you have already issued a VAT invoice showing the old rate of VAT.
http://www.hmrc.gov.uk/pbr2008/vat-guide-sum.pdf

PeteMc

Travel is dealt with in a specific way with regards to VAT. It's not as simple as £xxx inc VAT at 17.5%/15%. Read the HMRC website on Tour Operators Margin Scheme if you want more details.

[Deleted User]

Even if the VAT was simple, the tour operator doesn't need to lower their prices.

As long as they show that VAT is 15% they can increase holiday prices so that it is still the same cost as when the VAT was at 17.5%

dzug1

In the main there is no VAT on overseas holidays so there's no reduction to pass on.

Humphreyshalfmoon

There is only VAT on the profit margin, not on the holiday itself. No one has reduced prices, particularly the cruise companies who are desperate for business, so you won't see a penny.