In the wake of the global pandemic, the government had slashed the VAT rate to 9% from 1st November 2020, primarily for the hospitality and tourism sector to lend a financial hand. However, the sun has set on this relief with the rate reverting to 13.5% effective from 1st September 2023.
The ripple effect of this change isn’t to be underestimated – from the menu prices in restaurants and cafes to admission fees at attractions, and not to forget, the room tariffs at hotels and similar accommodations. Here’s your compass to steer through the VAT rate reset, ensuring your business stays compliant and your till systems are recalibrated for the transition.
Embracing the VAT Rate Transition: What’s on the Horizon?
The shift back to the 13.5% VAT rate is slated to come into effect from 1st September 2023. This change will have a broad spectrum impact on various goods and services within the hospitality realm:
- Dining at restaurants, cafes, and take-aways.
- Stays at hotels, guesthouses, B&Bs, and similar lodgings.
- Entry to attractions like museums, exhibitions, and cinemas.
- Hairdressing services.
The timely adherence to the new VAT rate is crucial to maintain compliance and avoid any potential repercussions.
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Tailoring Your Systems: Are You Tech-Ready?
In the transition to the new VAT rate, a critical focal point is the recalibration of your business’s till systems. This entails:
- Adapting your computer and till systems to reflect the new VAT rate on relevant goods and services.
- Ensuring your system is equipped to calculate different VAT rates for varying services and goods.
Manage Your VAT Affairs Wisely: Outsourcing as a Viable Route
Outsourcing VAT returns to seasoned professionals can be a prudent step to bypass the hurdles of errors, late submissions, and the resultant penalties and interest charges. This not only provides peace of mind but also safeguards your hard-earned money from being frittered away on avoidable financial pitfalls.
Legacy 9% VAT Rate: A Narrow Lane Continues
While the VAT rate for several services in the hospitality sector is bouncing back to 13.5%, some services continue to enjoy the 9% VAT rate:
- Magazines, newspapers, and periodicals.
- Provision of sporting facilities by profit-making bodies.
Over to You
Now that you’re armed with the essentials of the VAT rate transition, it’s time to align your business operations to sail smoothly through this financial tide shift.
Also read: What Type of Accountant is Best for Small Business?
