B&B Owners Pay Less VAT

DON'T PAY YOUR VAT!

On the your deposits, or your cancellation charges, if your guests cancel.

The recent bad weather has brought about a spate of cancellations for some of you in some parts of the country and the loss of revenue to some owners at this peak time may be a difficult bullet to bite.

Many of you will be thinking about your next VAT return about now. You will be totting up the outputs and inputs, or perhaps your have adopted the Flat Rate System of payment, either way money will be making its way from your account to the Government coffers very soon.

But are you paying too much?

In particular are you aware that if any guests pay you a deposit and then either cancel of worse don't turn up you do not have to pay VAT on that deposit?

Now it may be small comfort I grant you but I am a fervent believer in never paying anybody anything you don't have to and particularly when it comes to the Government.

The ruling is that because no actual service is supplied, because the guest did not arrive, that any monies paid in respect of the booking is treated as 'compensation' and not subject to VAT.

Interestingly the same rule applies to any cancellation charge you make, so if you receive any payment from a client under your cancellation charge policy then that money to is not liable to VAT.

The same ruling has been applied to Restaurants if they take deposits.

So what do you do now, well, look at the current quarter you are making a return for and:

Check to see if any of your declared revenue is VAT on deposits for guests who cancelled.  If is it reduce your sales declaration by the amount of cancelled deposit revenue and reduce your VAT payment by the VAT on those deposits.

Examine previous VAT Returns and determine whether you have made any overpayments. If you have call your local Customs and Revenue Office and ask how you would claim any refund.

As I said it may be that the amount involved is insufficient to worry you, alternatively if you say take 50% up front it might be you need to look at the issue. It may also make those owners who only take a small deposit to reconsider their options on deposits with a view to increasing them if appropriate.

Hope it helps.