Sean McGinness

In that statement, the chancellor announced a temporary reduction in the VAT rate for certain supplies of food and drink, hospitality, holiday accommodation and visitor attractions, to 5%.

The cut marks a significant reduction from the current 20% VAT rate and will be in place for the next six months.

The FAQs cover the changes, the supplies to which they apply, and retaining or passing those savings on to the consumer.

There is guidance included relating to catering, holiday accommodation, caravans and camping pitches, admission charges to attractions, and the treatment of deposits and vouchers, all of which will be of relevance to many diversified rural businesses.

Sean McGinness, partner, Saffery Champness, a member of the firm’s Landed Estates and Rural Business Group, and who heads the firm’s VAT group for its northern regions, said: “Whilst the changes seem relatively straightforward, once you dig into the detail, there are numerous complex areas that we hope our FAQ sheet will address. For example, how are different supplies of food and drink affected, what to do when there is a single supply with different elements, such as wedding packages, and timing of deposits paid and accommodation stays.

“Businesses need to consider also whether, if the rate change applies, they are going to pass it on to customers. It’s a tough decision as the measure is aimed at assisting the hospitality sector by reducing tax payable. Whether businesses decide to refund VAT already paid on a VAT inclusive price, or to reduce prices going forward to reflect the lower VAT rate is a commercial decision for them to make.”

The FAQs and answers can be found here.