Static Caravan VAT during lockdown (2)

A previous poster asked the question about the reduction in VAT to 5% from July and customers entitlement to refund having clearly overpaid VAT. How does the decision to refund overpaid VAT rest with the supplier, either VAT is payable or it is not, also the consumer can not find out if the supplier has reclaimed and simply kept it ? A clearer issue is that Caravan Parks Closed for 103 Days, the Government via the statement issued by the Competitions and Marketing Authority have made it clear that in Law the Contract was Frustrated, therefore a refund falls due for that period. That is the Governments stance not the Consumers. Why then have refunds not been given of the 20% VAT overpaid for that period. It seems HMRC are failing to ensure customers only pay VAT on what is required in Law why, and to whom do we complain

It would be very helpful if you could provide link where "the Government via the statement issued by the Competitions and Marketing Authority have made it clear that in Law the Contract was Frustrated" Many thanks in advance.

CMA Contract cancellations and refunds due to Covid 19, Updated 28 August 2020

Hello C Parry. When the reduced rate rules came in, in July for hotels and accommodation etc. Businesses had to look through the guidance with regards to what to do when a change of VAT rate happens. This guidance is covered in section 30 of VAT notice 700. This states: “When there’s a change in tax rate or tax liability, tax is chargeable in accordance with the normal tax point rules as set out in sections 14 and 15 of this notice, unless you decide to adopt the special change of rate provisions shown in paragraph 30.7.2.” This means if a tax point was created prior to the change then the business can charge the original rate of VAT which would have been 20% or they can choose to adopt the special provision rules. This is that businesses decision, they don’t have to adopt the special provision rules it is optional. If they decide to use the special provision rules to account for VAT at the lower rate then the guidance states: “If you use the special provisions, the basic tax point applies, and tax is due at the new rate. If you have already issued a VAT invoice showing the old rate of tax, you must correct it by issuing a credit note. “ With regards to the fact the parks were closed, and a statement issued by the competitions and marketing authority, we cannot comment on this. We can only advise with regards to VAT rules and helping businesses to ensure they are accounting for VAT correctly according to the published guidance. 30. Changes in tax rates and liability Thank You.

I note hmrc does not post any critique or negative response, is it vanity or simply they dont have a sensible answer. Very simple questions arising are. 1- How can you have a situation where a customer who pays for site fees for 2020 in Full in January pays more than someone paying Monthly for exactly the same when the former pays VAT @20% for the year, and the latter pays six payments @20% and six @5% ?. 2- How can there be two rates of VAT for the same facilities and services for the same period from the same supplier ? 3- Since when did the Supplier determine VAT rates at their whim, and clearly have no incentive or obligation to ensure overpayment is refunded ? 4- How does the Customer know if the money has been reclaimed and not repaid ?, and how does the HMRC know if such funds were repaid. and Finally 4- Why can the customer not demand the monies are reclaimed and repaid ?. Please do not refer to Rules, common sense please.

Hi Anthony Smith, 

We cannot provide a link to this. Please contact the Competitions and Marketing Authority if you require this information.

Thank you. 

It would appear HMRC are not willing to answer common sense questions where their guidance and rules are clearly laughable .

Hi We can only advise with regards to the guidance that has been published. It is the responsibility of the supplier to ensure the correct treatment of VAT is applied on his/her supplies. All rules on how businesses can deal with a change of VAT rate can be found in VAT notice 700 section 30 Changes in tax rates and liability The supplier should read these carefully to determine the correct rate of VAT to charge on their supplies. If the business does use the rules and guidance set out in 700 section 30 to change the rate of VAT originally invoiced for on their supplies sections 30.7.4 and 30.7.5 states, they should issue a credit note to the customer within 45 days after the change. This is then held in their business records for 6 years and HMRC can ask to view these records at anytime to ensure they have followed the guidance correctly. Thankyou. Regards.