Here’s what finance teams need to know:
How are the VAT rates changing?
From July 15th, 2020 until January 12th, 2021, a temporarily reduced VAT rate of 5% comes into effect for a range of hotel and hospitality goods and services.
The 5% rate replaces the standard 20% rate and is designed to help businesses that have been hit by forced closures and social distancing restrictions imposed during the coronavirus pandemic.
The 5% temporary rate applies to the following:
- Food and non-alcoholic beverages sold for on-premises consumption
- Hot takeaway food and hot takeaway non-alcoholic beverages
- Overnight accommodation in hotels or similar establishments
- Admissions to attractions not already eligible for cultural VAT exemptions such as:
How to embrace and manage the change?
The changes should deliver a welcome reduction in T&E costs. However, it also means more care needs to be taken when claiming back VAT on eligible business expenses.
Most receipts will include VAT in the breakdown of costs but otherwise, a check needs to ensure correct rates are applied to the expense category. This means checking:
- Is the expense covered by the temporary VAT change?
- Was the cost incurred during the temporary period? (July 15th, 2020 - January 12th, 2021)
How can Webexpenses help handle the change?
With Webexpenses the default VAT rates can be easily modified by finance teams to manage the temporary changes. With integration to all the major accounting packages, it provides an easy way to manage VAT and ensure all reimbursements are received.
This article was originally posted on the Webexpenses blog