Temporary VAT cut for hospitality sector

Key points

• On-premises sales of food and non-alcoholic drinks benefit from the reduced 5% rate.
• Advance payments for accommodation are specifically covered in HMRC’s guidance.
• The reduced rate applies to many tourist attractions but not sporting events.
• Mixed supplies may be affected by the new rules.
• The flat rate scheme percentages have been reduced for the sectors where the rate cuts are relevant.

When I heard about the temporary VAT reduction from 20% to 5% for the tourist and hospitality industry my initial reaction was similar to that of Brenda from Bristol when she was told about the general election being called in 2017: ‘Not another one.’ I was thinking about the last time a chancellor tinkered with VAT in 2012 – George Osborne’s infamous ‘omnishambles Budget’ sometimes referred...