VAT to be charged on retained payments and deposits from 1st March 2019
Warning of negative impact to hospitality industry!
Following a recent case in European Court of Justice, HMRC has changed the vat treatment of payments received for unfulfilled supplies such as deposits retained after a hotel or restaurant reservation has been cancelled or where goods that have been paid for are uncollected.
Previously these transactions were treated as being outside the scope and not subject to vat, with effect from 1st March 2019 these receipts will be treated as a tax able supply and vat accounted.
For further information please visit the update on change to the VAT treatment of retained payments and deposits on the GOV.UK website.
or contact your local MFW office for more help and advice.