He is considering moving onto the flat rate scheme for VAT but I am concerned that he will have to account for the flat rate on all of his turnover. Is this correct?
A. In general, you have to account for flat rate VAT on all supplies you make. However, there are certain supplies which are excluded from the flat rate scheme. Schedule 6 Item 9 (2)(a) of the VAT Act 1994 confirms that in relation to the hotel 28 day rule:
“the value of so much of the supply as in excess of 4 weeks shall be taken to be reduced to such part thereof as is attributable to facilities other than the right to occupy the accommodation”.
This means that for VAT purposes the actual value of the supply is reduced to the supply of the facilities and services (an amount set to at least 20% of the supply). Therefore, for flat rate scheme purposes the turnover for the flat rate calculation will be the reduced value.
If you have a VAT query why not contact the VAT Advice Line on 0844 892 2470 to discuss the implications. Our team of experts have a wealth of experience and can also provide a written consultancy service at £180 per hour plus VAT.
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