Holiday let and VAT

[Motheroftwofeline]

We have booking for holiday accommodation (in England) at the start of August. They have just invoiced us but the rate of VAT is still showing as 20%. This is going to cost us £150 more than the rate of 5%.

I’m mindful of the financial situation of the business (which is a small enterprise) but also of my own pocket where that is a lot to waste. We were happy and booked at the higher price though, obviously.

IABU to email and ask them to reduce the VAT and reissue the invoice? Or should I just pay up, knowing they’ll take it into profit?

Can you ask them on Wednesday to reissue the invoice?

Surely if they are charging "20% VAT" and only giving 5% to HMRC they have defrauded you plain and simple ?

I doubt HMRC would be too bothered, since the whole government appears to be run by con men nowdays, but it's still a little bit sharp practise.

Personally I'd sent a cheque (bank transfer) for the correct amount and let them chase it in writing.

That’s a good point re Wednesday, as that’s when the new rate comes in. But it’s more than a little sneaky to invoice today, I feel they’re deliberately trying to get one over. Or if I pay today do they automatically have to pay on the VAT at 20%?

I thought the 5% VAT applied to restaurants only

Why don't you ask them their intentions on 15/07 and see what they say? That way, you might feel less uncomfortable and they may cancel the booking and reissue with the prevailing VAT correct.

No it’s holiday accom too, I did check online for that. Just looking for advice here on how to deal with the operator

Honestly you were happy to pay previously the VAT decrease is to help businesses, I'm pretty sure none of them will pass it directly onto customers. I would pay it.

@Gizlotsmum

Honestly you were happy to pay previously the VAT decrease is to help businesses, I'm pretty sure none of them will pass it directly onto customers. I would pay it.

VAT doesn't work like that. It's charged to the end customer and then passed through the chain.

www.gov.uk/guidance/hotels-holiday-accommodation-and-vat-notice-7093

It seems to suggest onky hotels, inns and boarding houses get the discount

The price you paid is inclusive of VAT, you will not get a discount because of the reduced VAT rate. You wouldn't expect to or agree to pay more if the VAT rate had increased, would you?
The 20% will just be an admin error which will be corrected before their VAT return is submitted at the end of the month or quarter.

@Gizlotsmum

Honestly you were happy to pay previously the VAT decrease is to help businesses, I'm pretty sure none of them will pass it directly onto customers. I would pay it.

On that basis, does the VAT cut means hoteliers can charge customers at 20% and then only pay 5% to the gov? So the only people who gains are the hoteliers/the business? Is the intention not to get everyone spending ie customers spending the 15% saved?

Does the VAT rate apply only to new bookings?

@ShaunaTheSheep

Does the VAT rate apply only to new bookings?

Usually it applies in whatever is HMRCs favour

No, it is any entire payment not made by the 15th. If you have paid a deposit before then though, then full fee at 20% is applicable. AFAIK.

Whatever you pay them in Vat they will have to pay onto HMRC. Accounts systems auto work it out on the rate of VAT listed on the invoice.

That said it won't matter to them if they cancel the invoice and re issue on Wednesday. They don't lose. But you do so ask them to.

They don't have to pass on the saving.

What I mean is if your booking is £120 this would be £100 plus £20 VAT at 20%.

The rate is now 5%, so they will report is as £114.29 plus £5.71 VAT.

You pay the same, the business benefits by £14.29. This is the whole point of the temporary rate change, to benefit the business not the end consumer.

You were happy with the price when you booked it. Was the price quoted as being £x plus 20% VAT - £y or was it just £y? If the latter, you agreed a VAT inclusive total price - if VAT had gone up, you'd not want to pay more and the owner would have to accept the loss.

The measure is two fold, to encourage people to holiday in the UK AND to help small businesses. You'd already agreed a price, so you were going anyway, so any price reduction would only help you, and not the owner.

It's the same as the VAT decrease on restaurants - it's an incentive to get people back into restaurants by giving them a reduction on the bill. Just ask the operator to reissue the invoice on Wednesday.

@Molba

What I mean is if your booking is £120 this would be £100 plus £20 VAT at 20%.

The rate is now 5%, so they will report is as £114.29 plus £5.71 VAT.

You pay the same, the business benefits by £14.29. This is the whole point of the temporary rate change, to benefit the business not the end consumer.

Are you sure about that ?

@Tarararara
No, the £10 discount is the consumer incentive for restaurants. The VAT rate is for the business.

@DGRossetti
Yes

It seems from comments and the poll that people think IABU. I’m not set on any course of action yet, that’s why I’m seeking views. It was the invoice set out as rate + vat = £total that made me think.

Lots of misinformation here! The saving is for the customer - it's a measure taken to stimulate the economy, and Rishi said the VAT rate reduction will save the average family £160 per year on staycations and eating out.

I don't think you ABU. If you orginally agreed to pay £100 plus £20 VAT, I think you should now expect to pay £100 plus £5. Otherwise the business is basically charging you a higher price.