HMRC has issued an updated version of VAT Notice 709/3 entitled ‘Hotels and holiday accommodation’. The notice has been updated to reflect the change in the reduced rate of VAT for tourism and hospitality to 12.5% from 1 October 2021 to 31 March 2022. The VAT rate is expected to revert to the standard rate from 1 April 2022.
The notice explains how supplies by hotels and similar establishments such as motels, guesthouses, and B&Bs should be treated for VAT purposes. In addition, the notice also covers the VAT treatment of holiday accommodation such as caravans and camping facilities.
There are areas that hotel operators should be aware of such as the special rules that may allow sleeping accommodation to be VAT exempt if a guest stays for over 28 consecutive days. Hoteliers should also be aware of the VAT rules relating to deposits, cancellations, and other charges relevant to the hotel industry.
The notice includes sections on:
- Hotels, inns, boarding houses, and similar establishments
- Long stay guests
- Accommodation supplied for catering and other supplies
- Holiday homes
- Camping and caravans
- Deposits, cancellations, and other charges
- Examples of how to calculate reduced VAT value under the temporary reduced rate
Keeping on top of these legislative changes can be a time-consuming task that prevents you from growing your business. Call MJB Avanti | 08000 388799 to see how we can help you to stay on top of the numbers.