Will VAT reductions reduce my September holiday!

MabelArch

I have pre booked a caravan for September through Hoseasons and the balance is due in August. Will the reduction in VAT apply to my balance? With a reduction in onsite facilities since I originally booked this would help compensate the reduction of services on offer.

Retireinten

It depends if the holiday company passes on the VAT saving to you or not by reducing the price of its holidays.  They don't have to unless contractually you have agreed to pay x amount plus Vat for the holiday, which is highly unlikely.  Nor do they have to reduce prices for new holiday sales. The VAT reduction is intended to support businesses and that can be done in the form of passing on the VAT savings to encourage sales or increasing sales revenue by keeping the VAT savings for themselves.

I expect the decision will be driven by their financial position, the cost of administering the changes and most importantly, the action their competitors take!

Give them a ring and ask the question! 

Penguin_

I'd argue that the holiday would, from an accounting position, have been invoiced when you booked which was presumably before the VAT change. So they will have already paid the 20% VAT to HMRC therefore there won't be a change.

MabelArch

The t & c’s state that they can pass any VAT increases on so just thought if they can increase the cost upto the final payment date they should also be able to reduce the cost.

victor2

MabelArch said:

The t & c’s state that they can pass any VAT increases on so just thought if they can increase the cost upto the final payment date they should also be able to reduce the cost.

They can, but it doesn't say they will. They were just covering themselves against any increase in VAT imposed by the government. Even if they'd thought about a reduction they wouldn't need to cover it in the T&Cs. If they choose to give you a discount because of the reduced services, that is outside of the change in VAT.

If they now make a little more money because of the reduced VAT that might make the difference between staying in business or calling in the administrators. It's probably a drop in the ocean of their losses this year, but would you begrudge them that?