Reduced VAT

[xYachties]

VAT on Caravan and Motorhome Club has been reduced from 20% to 5% from to today. Wonder if others will follow?

Anybody know if others clubs and sites are reducing?

 

[2x2camper]

VAT on Caravan and Motorhome Club has been reduced from 20% to 5% from to today. Wonder if others will follow?

Anybody know if others clubs and sites are reducing?

Everyone who needs to will reduce the VAT, they might just not pass it on to the end customer though.

 

[maison]

The intention of the Chancellor was to allow businesses that had been closed because of Government instructions to recoup some of those losses, not customers.

If companies choose to pass the savings on that is great, but not expected.

 

[RobbyMClark]

They can keep mine if it helps them to stay afloat.

 

[Caggsie1]

Not reflected in my booking as yet, but early days.

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[Cheshirecat57]

They can keep it for me

 

[Larby]

Mr Thicko here, if I am billed at 20% VAT then if the business only declares 5% to HMRC that is false accounting surely?

 

[Cheshirecat57]

You are correct
But if it was £10 including 20% vat before and is now £10 including 5% vat ,I am no worse off but the business is better off,helping them to get back on their feet quicker

Alternatively, they can pass on the savings,encouraging higher sales and helping them get back on their feet quicker

I would hope that businesses do either one based on their business model to find the best way

I personally do not see it as primarily a scheme to save me money as a consumer, maybe Im wrong

 

[The Wino]

The intention of the Chancellor was to allow businesses that had been closed because of Government instructions to recoup some of those losses, not customers.

If companies choose to pass the savings on that is great, but not expected.

Can you find evidence of that intention?. I thought he said the vat reduction was to boost demand in which case the intention must have been for the reduction to be passed on to the consumer?

 

[Larby]

I thought the intention was to tempt the customer with a smaller bill whilst increasing turnover for the business?
Standard cost £8.33 plus VAT @20% £1.67 =£10.00
Standard cost £8.33 plus VAT @5% £0.42 £8.75
Business gets more turnover at no extra cost and customer enjoys smaller bill.
If price to customer remains at £10 and business shows VAT as 5% the cost is now increased from £8.33 to £9.52.
Surely this is not what the Chancellor intended?

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[The Wino]

I thought the intention was to tempt the customer with a smaller bill whilst increasing turnover for the business?
Standard cost £8.33 plus VAT @20% £1.67 =£10.00
Standard cost £8.33 plus VAT @5% £0.42 £8.75
Business gets more turnover at no extra cost and customer enjoys smaller bill.
If price to customer remains at £10 and business shows VAT as 5% the cost is now increased from £8.33 to £9.52.
Surely this is not what the Chancellor intended?

I think it was although the government were probably hoping that the public would hear vat reduction and get out there spending rather than do the sums and find out it's not a huge saving even if passed on.

 

[rickwiggans]

Mr Thicko here, if I am billed at 20% VAT then if the business only declares 5% to HMRC that is false accounting surely?

If that's what happened then yes. But that's not the way it will work. Businesses that pass the saving to customers with keep their ex VAT the same. Businesses wishing to keep the surplus will up their pre-VAT price, so that the price including VAT remains the same as before.

 

[maison]

I thought the intention was to tempt the customer with a smaller bill whilst increasing turnover for the business?
Standard cost £8.33 plus VAT @20% £1.67 =£10.00
Standard cost £8.33 plus VAT @5% £0.42 £8.75
Business gets more turnover at no extra cost and customer enjoys smaller bill.
If price to customer remains at £10 and business shows VAT as 5% the cost is now increased from £8.33 to £9.52.
Surely this is not what the Chancellor intended?

'Wasn’t that the 50% reduction on meals on Monday to Wednesday’s?

My post above came after listening to a Government Minister being interviewed on a news programme. He stated that the intention was for companies who had to close to make up some of their lost income by not having to pay the higher rate of VAT to the Exchequer.

I’m sorry I can’t give more info as that is all I have.

 

[F.M.C.Fourier]

This debate about whether the VAT cut was meant to be passed on to the customer (and hence boost demand) or whether it was meant to be retained by the business and hence help the hospitality trade recover from weeks of closures, has already been endlessly argued about on other threads in this place.

The Chancellor seemed to be at pains to avoid making this clear when he announced the change - and I think this was deliberate. Rather than argue one way or the other, and be open to potential criticism from those who thought differently, he decided to keep mum and let it take its course.

I said right at the start that, in my view, the smaller businesses would, and probably should, tend to keep the VAT cut, with good reason, whereas the big chains - the likes of Costa, Premier Inn, the CMC and many, many more would find themselves obliged to pass it on or face public vilification.

I am absolutely convinced that whatever people here may think, or whatever individual MPs may have said in interviews, the only definitive motive was to stimulate the economy in some way, but exactly which way perhaps even Mr Sunak himself could not decide.

 

[F.M.C.Fourier]

Just after I posted the above, and by a spooky coincidence, a document came to my inbox, from a VAT specialist company, which contained this paragraph:

Who Benefits?
There is some debate over who should retain the benefit of the reduced rate. Should it be the business or the consumer? The measure is intended to help businesses, but this can arise financially either as a result of paying less VAT to HMRC whilst maintaining the same prices or by attracting more custom by virtue of reducing prices. Some businesses may find that customers expect reduced prices (e.g. restaurants), whilst in some sectors the larger number of unregistered suppliers means that the same prices can be charged with a lesser VAT liability (e.g. holiday accommodation).

The reality is either option is valid.

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[ramsthom]

Costa Coffee are reducing their prices. Today a cappoccino was 30p cheaper.