5% VAT hospitality rate

ArthurAllen

I have a holiday home managed by Sykes - before COVID they charged me 16% plus  20% VAT on any bookings they took.  After recently checking payments they have made since the 5% hospitality rate came in, I have noticed that  they are still charging 20% on their commission.  I just have a query whether their commission charge should be + 5%?

ellie99

I use a holiday agency too. Last summer they did think they could charge 5% VAT but were given information which said the reduction is not applicable to Holiday agencies.
If you personally are registered for VAT you could use the reduction on your own bookings.

janeh52

A  comment on booking agencies from the other side of the fence ( as a customer). Back in February I made a hotel booking for this August through Booking.com, who at the time confirmed the agreed room rate and separately identified the VAT element at 20%. The reservation was payable on arrival at the hotel. They  declined to make any deduction for the reduction in VAT to 5% - which in effect put the room rate up. I don't know what responsibility the agency have in these circs in terms of contract law. Interested in any comments from forum members. 

unforeseen

janeh52 said:

A  comment on booking agencies from the other side of the fence ( as a customer). Back in February I made a hotel booking for this August through Booking.com, who at the time confirmed the agreed room rate and separately identified the VAT element at 20%. The reservation was payable on arrival at the hotel. They  declined to make any deduction for the reduction in VAT to 5% - which in effect put the room rate up. I don't know what responsibility the agency have in these circs in terms of contract law. Interested in any comments from forum members. 

There is no reason why there should be a reduction.
As a consumer you agreed an overall price which included VAT, whatever the rate may be. You are still paying that. How it gets split between room rate + VAT rate is of no concern to you.

The whole idea of the VAT reduction was to help the business not the consumer. 

molerat

unforeseen said:

The whole idea of the VAT reduction was to help the business not the consumer. 

Perhaps someone should have told the government that.

https://www.gov.uk/government/publications/introduction-of-a-new-reduced-rate-of-vat-for-hospitality-holiday-accommodation-and-attractions/introduction-of-a-new-reduced-rate-of-vat-for-hospitality-holiday-accommodation-and-attractions

This was aimed at supporting the reopening of the economy following the outbreak of the coronavirus pandemic and help to re-establish habits such as eating out in restaurants.

Where businesses opt to pass some or all of the saving on to customers this may result in increased spending in these sectors.

This measure is expected to continue to have a positive impact for individuals who go out for meals, buy hot takeaway food, stay in hotels or other holiday accommodation or visit the types of attractions outlined above.

So the intention was that some of the benefit should be passed on to the consumer to stimulate footfall / spend in the sector.

unforeseen

There was no intention that any should be passed apart from in minister's pipe dreams. Your quote below indicates that. The decision was left to the business. Most never passed the saving because they were desperate for income and the VAT reduction was a little unplanned extra. 
At the time, these boards had quite a few posts from people whinging that the price of their meal hadn't dropped

Where businesses opt to pass some or all of the saving on to customers this may result in increased spending in these sectors.

Pennywise

The "benefit" to the customer is that the 5% rate helped these businesses to survive.  The real benefit is that they're still in business and that customers are able to buy meals, accommodation, etc.  Many businesses are on a knife edge and the reduced rate of VAT is all that's keeping them from going under.

Pennywise

ArthurAllen said:

I have a holiday home managed by Sykes - before COVID they charged me 16% plus  20% VAT on any bookings they took.  After recently checking payments they have made since the 5% hospitality rate came in, I have noticed that  they are still charging 20% on their commission.  I just have a query whether their commission charge should be + 5%?

No, "you" aren't buying/using the holiday accommodation.  The reduced rate is on the final supply, i.e. the person using it.  "You" are using a service, i.e. marketing and administration, which remain standard rated.