Question about VAT on a holiday

[bunnyo]

We booked a holiday to Devon way back in Feb. The holiday is in August. We paid the deposit and the remaining balance is due soon.

Should the remaining amount be reduced now because of the VAT reduction which started yesterday?

It would depend on when the invoice was issued. If you were billed before the change then it would be the old rate, but if they only billed you for the deposit and will be issuing you a further bill after the rate change then the subsequent invoice would be at the new rate.

If you were happy with the price when you booked then that’s what I’d expect to pay

I worked in hotels when VAT changed between 17.5, 15 and 20%. It was a minefield!

I'm sure it depended on what the price said regards VAT. For instance, "£100 Inc VAT at current rate" is different to "£100 Inc VAT at 20%" .

The first would mean they could still charge £100 and only pass over £4.76 to HMRC.

The second suggests the net was £83.33 and the VAT was £16.66 and the new total will therefore be £87.49.

I'd agree though, if you we're happy with the price when you booked you should still pay it. I believe the VAT reduction is aimed at companies making the savings rather than the consumers.

Is it for a hotel, or a cottage/apartment. If the latter, there is unlikely to be any VAT on the cottage part, only on the booking fee.

Booking agencies have not had the benefit of the VAT reduction, so in these circumstances there would be no reduction applicable.

If they quoted you a VAT inclusive price, they have no obligation to pay you the difference.

If they quoted you a price plus VAT then you would expect to benefit from the cut.

If they don't confirm either way, it is assumed to be VAT inclusive.

If they quoted you a VAT inclusive price, they have no obligation to pay you the difference. If they quoted you a price plus VAT then you would expect to benefit from the cut. If they don't confirm either way, it is assumed to be VAT inclusive.

This is the correct answer.

Business to domestic customer transactions are usually "VAT inclusive" so if a VAT rate changes, the original price stands.

You wouldn't be happy if VAT had increased after you'd paid for goods and services when you'd already paid the agreed price.

Many smaller hotels won't even be VAT registered in the first place.