- Suppliers are inconsistently charging VAT on temporary accommodation, especially for stays over 28 days, leading to risks for local authorities.
- Authorities may pay irrecoverable VAT or over-claim VAT recovery, exposing them to HMRC challenges, backdated assessments, interest, and penalties.
- Small VAT errors can accumulate into significant financial exposure across multiple service areas.
- After 28 days, only 20% of the accommodation charge should be subject to VAT, but many suppliers incorrectly apply standard VAT to the full amount.
- HMRC is scrutinizing VAT recovery practices, and incorrect VAT treatment can result in substantial costs for local authorities.
Source: pstax.co.uk
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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