The government has made an announcement on 8 July 2020 allowing VAT registered businesses to apply a temporary 5% reduced rate in the Food Retail and Hospitality sectors. The temporary reduced rate will take effect from 15 July 2020 to 12 January 2021.
It is believed that these measures will inject life back into the economy and those businesses that have been, and continue to be, affected by COVID-19.
Salman, our Sales Director, says it's the right decision. "The reduction in VAT will aim to boost the food retail sector back to its pre-Covid19 state and get the economy rolling again."
These measures are taken as an urgent response to the COVID-19 pandemic to support a sector severely affected by social distancing measures and, in some cases, forced business closures.
What does this mean for our clients?
If you supply food and non-alcoholic beverages, hot takeaway food, or hot takeaway non-alcoholic drinks on your premises - for example a takeaway, restaurant, café or pub - then you're required to charge the reduced rate of 5% VAT between 15 July 2020 and 12 January 2021 on those items.
However the government have yet to announce specific details on how these VAT measures should be introduced, and many businesses are left with questions over what specifically should change. The government is expected to make a further announcement with more details.
Regardless, we have already begun the technical process to implement these changes before the government deadline kicks in, so our clients need not worry. We have a great customer service team and we will be able to implement these changes to enable our clients to continue trading as usual.
We're preparing a mass update for all VAT-registered clients on Tuesday night and, if all goes smoothly, on Wednesday you can simply switch on and keep trading as normal. Your Z Report will reflect the VAT change at the end of the day.
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