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Posted Wed, 11 Nov 2020 21:39:18 GMT by Anthony Smith
We paid our site fees for our static caravan for 2020 in advance in December 2019. The VAT rate charged was 20% Bearing in mind the temporary reduction to 5%:- Q1 Are we entitled to a rebate on the VAT at the reduced rate from 15th July 2020 to December 31st 2020 taking into account annual prepayment of site fees. Q2 Does the answer to Q1 depend on whether or not the Park Owners have claimed the rebate themselves ? Q3 If the answers to Q1 and Q2 are yes are we legally entitled to the rebate or can the Park Owners reclaim it and not pass it on? Q4 On invoice for 2021 (once again to be paid in advance by December 2020) should fees be split into pre-March 31st @ 5% VAT and Post April 1st 2021 be charged at 20% or can they just issue invoice based on 5% for whole year. As this has possible implications based on 350,000 Caravan / static owners at around £500 VAT rebate totalling £180 million this is an absolutely vital matter that requires absolute clarity! I thank you for your help in advance
Posted Fri, 13 Nov 2020 12:51:17 GMT by HMRC Admin 4
Hi,
In most cases, the supplier will simply account for VAT at 5% for supplies made between 15 July 2020 and 12 January 2021. However, there may be situations where they receive payments or issue invoices before/after 15 July 2020 for supplies that take place on or after 15 July 2020.

More information about the rules that apply in these situations can be found in sections 30.7 to 30.9 of VAT Notice 700 ‘VAT guide’.

VAT guide (VAT Notice 700)
Posted Fri, 13 Nov 2020 14:06:59 GMT by Anthony Smith
Many thanks for your quick response but as a mere layman I do not fully understand the technical terminology thus that is the reason I split the original posting into 4 separate yes/ no questions. Would it be possible to address those questions as such?? In simple terms I am asking:- I paid Company the VAT @ 20% for year in advance. With VAT reduced thereafter, if Company claimed back reduction from HMRC have they got an obligation to pass on that rebate to myself?? Sorry to drive you mad but absolute clarity is required Regards and thanks in advance
Posted Wed, 18 Nov 2020 13:20:16 GMT by HMRC Admin 11
Hi,

Please understand that it is the responsibility of the VAT registered supplier to establish the correct liability of any given supply.  HMRC do not normally supply a VAT ruling to a supplier’s customer, unless they disagree with the supplier’s original decision and the relevant VAT Notice does not cover the matter.

In this case, section 30 of VAT Notice 700 provides the answers to your enquiries.

Paragraph 30.8 establishes that, for supplies of services that take place before and after there has been a change in the tax liability, suppliers can apportion their charges.

This means they can charge VAT at the old tax rate for work performed before the date of the change, and charge VAT at the new rate for work performed on or after that date.

This is a business decision for suppliers to make and they are not required to do so.

If you have any further queries regarding the VAT charged to you by your supplier please refer to the above guidance and discuss this with them direct.

Thank you. 
Posted Thu, 19 Nov 2020 14:24:24 GMT by Anthony Smith
Many thanks for your answer. Am I correct in assuming then that if they decide to amend to the new reduced rate of VAT that they are obliged to issue a Credit Note then issue new Invoice at prevalent rate in order to validate the change and if so is that within 45 days of the change? Thanks in advance and sorry to ask so many questions but I am a mere layman who does not understand accountancy terminology and it is very important that I get your interpretation clear
Posted Fri, 20 Nov 2020 09:38:18 GMT by Trevor Steel
A factor to bear in mind is that it is a contractual issue (rather than a VAT issue) as to whether amounts are quoted on a VAT inclusive or VAT exclusive basis. As an example with easy figures, a charge of £100 "plus VAT at the applicable rate" would change from £100 + £20 (20%) VAT = £120, to £100 + £5 (5%) VAT = £105. This gives a £15 refund to the customer. However, a charge of £120 "including VAT at the applicable rate would change to £114.29 + £5.71 (5%) VAT = £120. This gives no refund to the customer, leaving a £14.29 benefit of the VAT rate change with the supplier. As HMRC's posts have mentioned, it is for the supplier to decide whether to apportion charges that cover a period that crosses the rate change. Clearly suppliers are more likely to do this where the contractual position leaves them with the benefit, as in the second example above. You would hope that they would still do so in the first example, as it benefits their customers. But it creates extra work for them, for which they would receive no direct benefit.
Posted Mon, 23 Nov 2020 13:16:28 GMT by Anthony Smith
Thanks Trevor An invoice was issued by the Company for next years fees which was without question in the for of a VAT invoice with VAT reg details and VAT amount specification. In your opinion does this alter matters??
Posted Tue, 24 Nov 2020 12:57:58 GMT by Trevor Steel
I still believe it's the wording of the contract that is important. If there's no formal contact as such, there's still likely to be some "terms and conditions" document which would have been available when you first entered into the arrangement, and may have been updated periodically since. Unless there's anything that specifies that charges are £x plus VAT (rather than £y including VAT), it's normally assumed that prices quoted to the public include VAT at whatever rate applies - in which case the benefit of a rate reduction (or the cost of an increase) rests with the supplier. Don't know how long you've had the caravan - but there were a lot of rate changes over a few years starting in late 2008. First 17.5% to 15%, then back to 17.5%, then up to 20%. If they didn't send extra invoices for part-years when the rate went up, they're unlikely to issue refunds when the rate goes down. But ... it is technically a contractual issue rather than a VAT one, even though it's a VAT amount that's involved.
Posted Tue, 24 Nov 2020 13:08:34 GMT by Trevor Steel
On the invoice point, suppliers are always required to show a full breakdown of VAT rates and amounts on any invoices for over £250 - so I don't see that affects anything.
Posted Wed, 25 Nov 2020 12:04:25 GMT by Anthony Smith
Hi Trevor Your info is brilliant and most helpful! In the actual contract it clearly states that fees will be "reviewed" following "changes in rates of taxation". Am I correct in assuming that this would be most "helpful" to mel!
Posted Wed, 25 Nov 2020 23:06:31 GMT by Trevor Steel
It sounds like they're giving themselves scope to amend their fees if the VAT rate changes, without actually compelling themselves to do so. A "review" might result in a change, but equally it might not! Assuming there's nothing else in the contract, I don't believe that they're compelled to give you a refund. They could "review" their VAT-inclusive fees and decided to leave them unchanged! If you haven't already contacted them, you could direct them to the guidance that HMRC referred to in their earlier replies (section 30 of Notice 700 - https://www.gov.uk/guidance/vat-guide-notice-700#changes-in-tax-rates-and-liability) and ask them whether they will be reducing their fees to take account of the change in VAT rate. No guarantee that they will - but there's no harm in asking.
Posted Thu, 26 Nov 2020 17:42:50 GMT by HMRC Admin 10
Hi

As per VAT Notice 700, section 30.7.5 (Credit notes) Any credit note should be issued within 45 days after the change and should contain the details that are explained within this section.

VAT Notice 700 can be found using this link:

The guide to VAT rules and procedures.

Thankyou.

Regards.

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