Value Added Snacks? Eagle Consulting explain HMRC’s recent VAT liability announcement

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Many businesses that offer function room hire for catered events remain unaware of the recent VAT liability announcement made by HMRC. Eagle Consulting clarify the situation and explain what the changes mean for those businesses.

Eagle Consulting
Many business that offer function room hire may not be aware of the recent VAT change, and as a result might not be complying with the VAT requirements and could be undercharging.

The past:

Prior to 2011, HMRC held the view that function room hire would only be subject to VAT where both the room hire and catering were supplied together. Where the catering was provided by a third party, the supply of the room only by the operator would be exempt from VAT.

The present:

In October 2011 HMRC changed its view and published an updated version of Notice 709/3 Hotels and holiday accommodation confirming that all function room hire for catered events would be standard rated, regardless of who supplied the catering. On 22nd January 2013, HMRC issued a further brief confirming this change.

The future:

HMRC has confirmed that no action will be taken against those who have not applied VAT to such room hire since October 2011, as they had not issued revised guidance to reflect their change of view. However, with the issue of the brief all businesses must ensure that with effect from 22nd January 2013, VAT at 20% is applied to all room hire for catered events, even where the hire is on a room only basis and the catering is supplied by a third party.

Help is at hand:

Eagle Consulting provide bespoke, fully integrated accounting solutions to businesses throughout the UK. Among their nearly 50 employees are several qualified accountants, including a CIOT qualified accountant, giving access to a high level of expertise across all areas of accountancy including tax.

Established in 1993, Eagle Consulting is based entirely in the UK and offers a complete Accounting Service delivering flexible and cost-effective solutions to meet the day to day needs of growing businesses. Eagle Consulting deploy a range of management accounts services, payroll services, treasury services, including Bacs Bureau services, and compliance services, that provide the ability to manage cashflow and record and control revenue and expenditure. Their expert team can provide weekly and monthly Financial Information and KPIs and can support clients with personal and corporate tax planning whilst ensuring all statutory requirements are met. Eagle Consulting’s client portfolio currently comprises over 700 companies nationwide and includes businesses from a wide range of sectors.

Eagle Consulting
15a Harbour Road, Inverness, IV1 1SY
0800 731 5368

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Harry Hornby - Director
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