As to be expected there are lots of questions about the 5% rate and other items of announcements, so below are the updated explanations
C19 BUSINESS NEWS UPDATE
It has been a busy week with new Government initiatives on reduced VAT, updates to the Job Retention Scheme (CJRS), Eat to Help Out scheme and the reopening of certain businesses.
The reduced VAT scheme starts on the 15 July so talk to us if you have any concerns. The CJRS has become more complicated especially around recording accurate information on flexible furloughed employees so do ask us about our spreadsheet to help you record employees time worked and time on Furlough.
VAT – REDUCED RATE OF 5%
The government made an announcement on 8 July 2020 allowing VAT registered businesses to apply a temporary 5% reduced rate of VAT to certain supplies relating to:
- hotel and holiday accommodation
- admissions to certain attractions
The temporary reduced rate will apply to supplies that are made between 15 July 2020 and 12 January 2021.
Reduced rate for hospitality, holiday accommodation and attractions
If you supply food and non-alcoholic beverages for consumption on your premises, for example, a restaurant, café or pub, you’re currently required to charge VAT at the standard rate of 20%. However, when you make these supplies between 15 July 2020 and 12 January 2021 you will only need to charge 5%.
You will also be able to charge the reduced rate of VAT on your supplies of hot takeaway food and hot takeaway non-alcoholic drinks.
More information about how these changes apply to your business can be found in Catering, takeaway food (VAT Notice 709/1). See: https://www.gov.uk/guidance/catering-takeaway-food-and-vat-notice-7091
Hotel and holiday accommodation
You will also benefit from the temporary reduced rate if you:
- supply sleeping accommodation in a hotel or similar establishment
- make certain supplies of holiday accommodation
- charge fees for caravan pitches and associated facilities
- charge fees for tent pitches or camping facilities
More information about how these changes apply to your business can be found in Hotels and holiday accommodation (VAT Notice 709/3). See: https://www.gov.uk/guidance/hotels-holiday-accommodation-and-vat-notice-7093
VAT on admission charges to attractions
If you charge a fee for admission to certain attractions where the supplies are currently standard rated, you will only need to charge the reduced rate of VAT between 15 July 2020 and 12 January 2021.
However, if the fee you charge for admission is currently exempt that will take precedence and your supplies will not qualify for the reduced rate.
This applies to:
- amusement parks
- similar cultural events and facilities
Examples of where the reduced rate may apply could be attractions such as:
- a planetarium
- botanical gardens
- studio tours
- factory tours
More information about how these changes apply can be found in VAT: Admission charges to attractions.
CORONAVIRUS JOB RETENTION SCHEME (CJRS) – INDIVIDUALS YOU CAN CLAIM FOR WHO ARE NOT EMPLOYEES
From 1st July “Flexible Furlough” was introduced and the calculations and time recording of full-time, part-time and fully furloughed employees has become more complicated.
Changes are occurring regularly as the Government and HMRC make clarifications to the scheme. If you have any queries regarding your claim talk to us first.
The latest changes are outlined below:
Steps to take before calculating your claim using the Coronavirus Job Retention Scheme
Wording has been added to make it clear that HMRC will not decline or seek repayment of any grant based solely on the particular choice between fixed or variable approach to calculating usual hours, as long as a reasonable choice is made
You can claim a grant for individuals who are not employees – as long as they’re paid via PAYE. The groups you can claim for include:
- office holders (including company directors)
- salaried members of Limited Liability Partnerships (LLPs)
- agency workers (including those employed by umbrella companies)
- limb (b) workers
- Contingent workers in the public sector
- Contractors with public sector engagements in scope of IR35 off-payroll working rules (IR35)
Individuals who are paid through PAYE but not necessarily employees in employment law, can continue to be furloughed from 1 July as long as you have previously submitted a claim for them for a furlough period of at least 3 weeks between 1 March and 30 June 2020.
Paying employee taxes and pension contributions
There is also an update on ‘Paying employee taxes and pension contributions’ section and added wording to section on employee rights to make it clear that you can continue to claim for a furloughed employee who is serving a statutory notice period.
The process HMRC is developing to recover overclaimed grant amounts through the tax system
Information has been added about the process HMRC is developing to recover overclaimed grant amounts through the tax system.
If you have made an error in a claim and do not plan to submit further claims, you should contact HMRC to let them know about the error and find out how to pay back any overclaimed amounts. Once you have contacted HMRC you will be given a payment reference number and directed to make a payment.
The Government are introducing legislation to recover overclaimed grant amounts through the tax system. If you repay any overclaimed grant amounts back through the above methods then this will reduce or, if the full amount is repaid, prevent any potential tax liability under that legislation. Further guidance on this will be issued in due course.
If you have made an error that has resulted in an underclaimed amount, you should contact HMRC to amend your claim. As you are increasing the amount of your claim, they need to conduct additional checks.
Please talk to us about CJRS claims – we have an information collection spreadsheet to help you and we can estimate your claim ahead of making it, we are easy to contact www.shaikhandcoaccountants.com, or 01892 552696
The information contained in this article is for general information purposes only and does not constitute advice, Whilst we endeavour to keep the information up-to-date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability for a particular purpose. We recommend that professional advise should be taken from a suitably qualified expert before undertaking any action.