The UK Government announced in its emergency Budget a number of VAT measures including a temporary reduction to the Standard Rate of VAT from 20% to 5% for the hospitality sector. This VAT cut, which runs until 12 January 2021, is designed to boost customer demand in response to the economic crisis caused by the Covid-19 pandemic.
This is great news for the hospitality sector as it reopens to the public albeit with reduced capacity. However, as with most legislative changes which are introduced quickly, this has resulted in many questions and areas requiring clarification. HMRC has now provided updated guidance for food, catering as well as the law introducing three new groups to the reduced rate. BDO has since discussed a number of points of uncertainty with HMRC and has established a number of important clarifications as explained below.
Source: BDO UK
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