Center Parcs VAT policy ?

dillydilly

got an e-mail today from Center Parcs cheekily suggesting I should book my 2011 dates to avoiud the increase in VAT - thereby implying they will happily be increasing prices in 1st January. Anyone remember their policy when VAT came down to 15% ? I don't remember them reducing their prices at all... Sounds like the accountants in charge looking for any excuse to squeeze an extra few more pounds profit by playing on VAT rise fears...

moneypooh

This will be common practice with most companies in a few weeks time. All companies will try to get advanced sales before the increase comes into effect. Probably just to get the sale as people may not book after feeling the true effects of the increase.
CP probably won't be putting the basic rate up but as VAT has increased we will see prices going up. They will be paying 20% on their overheads and by law have to charge 20%. A few companies will offer paying the difference for a while, but will go with the increase in the end or lose profit.

I've had similar 'cheeky' emails from companies doing exactly the same thing.

Mark_Hewitt

My wife deals in VAT returns for companies and during changes there is always mass confusion as to when each rate needs to be applied. e.g. When the booking is made, or in the case of tradesmen; when the work is done, or when the invoice is raised?! Nightmare.

I assume same as the last changes that businesses that are open past midnight are not subject to the increased rate until they close and open again or 5am, whichever is sooner.

JasonLVC

dillydilly wrote: »

got an e-mail today from Center Parcs cheekily suggesting I should book my 2011 dates to avoiud the increase in VAT - thereby implying they will happily be increasing prices in 1st January. Anyone remember their policy when VAT came down to 15% ? I don't remember them reducing their prices at all... Sounds like the accountants in charge looking for any excuse to squeeze an extra few more pounds profit by playing on VAT rise fears...

The Time of supply for services (which is what holiday lets like Centerparcs are), is either the date the money is received from the customer or the date the service is completed/finished. - clearly you cannot occupy a lodge at Centerparcs without paying all of it up front and so the time of supply will be when you pay your deposit and again when you pay your final balancing amount.

So Centerparcs are wanting you to pay for your holiday up front now when the VAT rate is 17.5%, so when you go next year, you've already paid them. Pay anytime upto 3rd January 2011 and they'll charge you 17.5%.

If you book your holiday on 4th January 2011 when the VAT has gone up, they will have to charge you the higher rate of VAT.

You will save a few quid (especially on Centerparc prices!!), but really all they're doing is getting a huge amount of cash up front now which can sit in their bank accounts for many months earning interest.

moneypooh

So in that case are you saying you'll be re-invoiced later next year if you only pay the deposit before 3rd Jan??

wealdroam

moneypooh wrote: »

So in that case are you saying you'll be re-invoiced later next year if you only pay the deposit before 3rd Jan??

If you only pay the deposit before 3 Jan, then when you pay the balance the company will have to submit vat at 20% on that balance.
Whether they charge you extra... you might want to ask them.

pinkmami

Intersting...cos I've already paid a deposit for an Easter Break......me thinks I'll pay the balance off after Chrstmas then!

dillydilly

A common mis-conception - the end consumer pays VAT. NO - we pay the price offered, the supplier/retailer then pays the VAT by deducting the appropriate rate from the amount they receive.

Retailers want us to believe the price increase is out of their control, because they need consumers to pay the full rate to avoid diluting their margins. Fact is, consumers pay the market price, and if some retailers choose to absorb the VAT increase they will attract a greater share of the market than those who don't.

CPs will attempt to increase their pricing in January, as all business constantly do on an ongoing basis - if they can hold sales on higher pricing of course they will. Problem with CPs is that demand for the brand exceeds supply, so they will seek any excuse to increase pricing that avoids another invite to appear on Watchdog...

moneypooh

Going back, we had a fall and rise on VAT recently. We paid deposits for some CP breaks when it was 15% then paid and took our breaks when it was back up to 17.5%; we didn't get charged the higher VAT rate when completing our payment. If they did this last time I doubt that they'll do it again. The email said to book, not completely pay for the holiday therefore sealing the price.

This situation is going to be very common. We have a holiday booked with Thomson next year and have paid the deposit, I asked about the VAT and they weren't going to put the rest of my holiday on 20%. They too didn't change rates either way with the last rise and falls.