Accounting for VAT - right rate at the right time
Any tickets for admission sold before 1 October 2021 for events that will take place after that date will be subject to VAT at the 5% reduced rate. This is an important point, and in our experience is often overlooked, with VAT being frequently accounted for incorrectly using the date of admission.
Similarly, deposits or payments received prior to 1 October 2021 for catering or accommodation to be provided after 30 September 2021 will benefit from the rate of VAT applicable on the date when the payment is received. Normal tax point rules apply, usually based on the invoice or payment date, whichever comes first. If the policy of the business is to pass on the benefit of the reduced rate to customers, making them aware of the potential for lower fees might encourage sales and therefore improve cash flow for the business. Customers will also be grateful for the opportunity to benefit from lower costs. For example, many individuals have had to rearrange weddings to dates after 31 March 2022. Those who pay for the catering element in advance can benefit from the lower VAT rate. Pay before 1 October 2021 and the 5% applies, pay between 1 October 2021 and before 1 April 2022, then the 12.5% applies.