Businesses passing on VAT reduction

Nebulous2

There will be a variety of approaches, with the benefits being difficult to measure. They are still arguing about the effects of the last cut. I thought the chancellor said most firms passed it on last time, though at a quick look the only thing I’ve found is this, which says 8 out of 10 firms claim to have passed it on.

It really doesn’t matter to me. I’m reducing my expenditure and neither £10 for a few days in August nor a few quid off vat will change that. £500 of vouchers might have, to make sure I used them before they ran out. 

https://www.bbc.co.uk/news/business-53340768

bluestaff98

Hi I have a static caravan in wales which opens from april to October due to covid 19 it opened 11th of july we have received our invoice for carvan pitch fees which has to be paid by end of july with vat charged at 20% I've questions site owners as vat is dropped as of 15th of july to 5% they have responded to say the 5% does not apply to static caravan at all only holiday let's can you please confirm if this is correct 

Thrugelmir

bluestaff98 said:

Hi I have a static caravan in wales which opens from april to October due to covid 19 it opened 11th of july we have received our invoice for carvan pitch fees which has to be paid by end of july with vat charged at 20% I've questions site owners as vat is dropped as of 15th of july to 5% they have responded to say the 5% does not apply to static caravan at all only holiday let's can you please confirm if this is correct 

Have a read.
https://www.gov.uk/guidance/hotels-holiday-accommodation-and-vat-notice-7093

diggingdude

The interesting debate will be on things charged +VAT in the future. If I book something for next summer and the contract says £800 + VAT you can bet if VAT goes up companies would increase what they charge me. I don't mind paying the price but it would be a bit rich after the cut wasn't passed on now 

bradders1983

Which travel companies advertise a price minus VAT anyway to the normal consumer? I would wager hardly any.

gt94sss2

I believe firms have to advertise costs as inclusive of VAT if selling to the general public.

Ex Vat prices are only used where one business is selling to another

Alistair1

mattyprice4004 said:

Socajam said:

What is wrong with this greed - it's nauseating
As others have said, the price was paid before the VAT reduction - go away and enjoy yourself - and thanks to the Creator that you are alive and kicking.

Just what I was thinking. Let's penny pinch from an industry that's been literally forced to close for several months. 
These would be the same lemmings that were moaning if the hotel went under, and they either lost money or had to pay more to book elsewhere. 

They do say money brings out the worst in people...! 

I would have to disagree. If for example I purchased a hotel room for £120, I am forming a contract to accept goods/service of value £100+£20 VAT.
If VAT has been reduced to 5% i should therefore now have to pay £100+£5. The business should not automatically be able to profit the £15.  
In this scenario the hotel does not make any less money and no one is penny pinching the only person missing out is HMRC. If the purchase was made after 15th July and states 20% on the receipt then that's the amount that should go to HMRC or a refund due to the purchaser. 

I have no issues if the hotel due to the decreased VAT now raises their prices for future purchases so that they charge £114.30 + £5.70 VAT = £120


The objective of this reduction in VAT is to assist consumers and businesses not one or the other. By lowering VAT it's supposed to entice consumers with lower prices without the business having to make any less profits. 

prowla

Socajam said:

What is wrong with this greed - it's nauseating
As others have said, the price was paid before the VAT reduction - go away and enjoy yourself - and thanks to the Creator that you are alive and kicking.

I know - having VAT reduced and pocketing the difference is indeed pure greed.

Nebulous2

The caravan club has struggled during lockdown, and has been inundated with bookings since it became clear they were reopening. Most sites are fully booked all summer. They operate a pay-on-arrival model, and have announced they will be passing it on. 12.5% to be deducted from each booking when you pay. 

Floridamad101

Alistair1 said:

mattyprice4004 said:

Socajam said:

What is wrong with this greed - it's nauseating
As others have said, the price was paid before the VAT reduction - go away and enjoy yourself - and thanks to the Creator that you are alive and kicking.

Just what I was thinking. Let's penny pinch from an industry that's been literally forced to close for several months. 
These would be the same lemmings that were moaning if the hotel went under, and they either lost money or had to pay more to book elsewhere. 

They do say money brings out the worst in people...! 

I would have to disagree. If for example I purchased a hotel room for £120, I am forming a contract to accept goods/service of value £100+£20 VAT.
If VAT has been reduced to 5% i should therefore now have to pay £100+£5. The business should not automatically be able to profit the £15.  
In this scenario the hotel does not make any less money and no one is penny pinching the only person missing out is HMRC. If the purchase was made after 15th July and states 20% on the receipt then that's the amount that should go to HMRC or a refund due to the purchaser. 

I have no issues if the hotel due to the decreased VAT now raises their prices for future purchases so that they charge £114.30 + £5.70 VAT = £120


The objective of this reduction in VAT is to assist consumers and businesses not one or the other. By lowering VAT it's supposed to entice consumers with lower prices without the business having to make any less profits. 

I agree the idea of the reduction to entice people to spend to get the economy moving again without impacting on profits.
Mr Sunack should have made it mandatory. 
Just a point : If I stay in a hotel for business now I will be charged 5% VAT. With the room rate still at the same rate overall let's say £100 Before I could claim £20 back in VAT now it's only £5 this makes a cost increase on my business of £15 making me less profitable so I have to charge more.
If it's made mandatory this would have no effect so I would be able to keep my rates the same.
Comments please..