VAT Rate Change

Janex

I run a holiday cottage company whereby people pay a deposit and then some months later pay the balance for a holiday cottage booked. Therefore I have deposits from some people for bookings next year and full payment from some people for bookings next year. Can anyone advise me on what rate of VAT I should pay? Would the best thing be to make a list of all monies that have been paid to me now, but they haven't had a service rendered (i.e. stayed in the cottage) yet? Would I then pay the new 17.5% VAT on the figure I reach? Confused..... Thanks in advance!

anamenottaken

I assume you are VAT-registered.

If clients have paid in advance in full then you should have issued a VAT invoice at the 15% rate (assuming that was the rate in force at the time of the payment).

If they have only paid a deposit and you have not issued a VAT invoice then you should invoice them at whatever is your usual time and apply the then current VAT rate to the whole amount.

You should have received leaflets about the change from HMRC.

If in doubt, contact the VAT office on Tuesday.

JasonLVC

The receipt of the deposit sets the tax point - whether or not you have issued an invoice or not so if customers have paid a deposit before 31 Dec 2009 then the VAT is charged at 15% on the deposit.

When the customers pay the remaining amount next year then that will be at 17.5% so you may need to make your custoemrs aware that they owe you a little bit more money - else you could end up short changed as if I've paid 50% deposit on say £1,000 holiday (ie, £500) then I'd expect to only pay you another £500 when in fact it'll be 2.5% more.

Depends upon how you price your holidays/what your paper work states.

robert_harper_2000

If you invoice it now then you are allowed to charge them at the 15% rate as it is under £100k and they have paid in full within 6 months.