The UK's reduced VAT rate of 5% for the hospitality, hotel and holiday accommodation sectors, which applied from 15 July 2020, came to an end on 30 September 2021. It has been replaced from 1 October 2021 with a new reduced rate of 12.5%, which will run until 31 March 2022.
There are a few points to note for continued use of AutoEntry now that this change is in effect. The main changes will have occurred within your accounts package provider and your first step should be to consult their guidance on the setup and handling of suppliers and invoices etc.
Essentially, AutoEntry will not change. It will still extract the Net, VAT and total figures from your invoices uploaded and it still fully integrates with all accounts packages as before; however, there are a few points to note after the new VAT changes are introduced:
Getting the New 12.5% VAT Rate into AutoEntry
AutoEntry does not automatically populate changes in your accounts package. To reflect the VAT rate changes in AutoEntry, once made in your accounts package, simply go to the Integrate page and click on the Re-Sync Data button. This can take a few minutes to complete, and any new VAT rates already set up in your accounts package will be found in the regular drop-down menu. Note that provided the previous 5% temporary rate remains available in the accounts package, it will also remain synced and available for selection in AutoEntry.
You may have already saved settings for suppliers with previous VAT rates (e.g. 20% or 5%). For supplier invoices that have the new 12.5% VAT rate, these simply need to be remembered again with the new 12.5% rate selections. There is no need to delete previously-remembered settings (i.e. against the 20% or 5% rates) as these will not apply where 12.5% VAT is present on the invoice (and the 20% rate may be needed again for transactions after 31 March 2022.
Invoices with Incorrect VAT Rate in Use
Where an invoice is presented with the old rate, AutoEntry will extract that figure as normal and if 20% or 5%, any remembered settings will be applied. We would advise caution before posting invoices to ensure that the supplier has applied the correct VAT rate before publishing through. The invoice data can be edited before publishing if required or edited in your accounts package. AutoEntry does not provide a warning or rate check that the correct VAT rate is in use.
AutoEntry uses the gross total of an invoice as one of the criteria for recognising duplicate invoices. If the same invoice is uploaded twice with the old 20% or 5% and the new 12.5% VAT rate applied, these will not be flagged as a duplicate as the gross totals will differ. Therefore, caution is recommended when uploading updated invoices and before publishing invoices through to mitigate any errors with duplicate invoices.
If you use AccountsPrep, please refer to AccountsPrep - UK VAT reduced rate for hospitality, holiday accommodation and attractions. If you have any queries relating to this, of course, please let us know through the chat bubble to the bottom right.
This article provides general rather than specific guidance to assist all of our customers. We always do our best to make sure that the information is correct but as it's general guidance, no guarantees can be made concerning its suitability for your particular needs. The information is valid at the time of publishing and is provided without any warranty of any kind, express or implied. You should take professional advice if you require specific guidance on your individual circumstances, for example to ensure that the results obtained from using our software comply with statutory or regulatory requirements. For VAT, customs and excise and duties enquiries you should call the HM Revenue and Customs (HMRC) National Advice Service Helpline on 0300 200 3700, contact your local HMRC office or visit their website at www.hmrc.gov.uk In no event will we be liable to you for any direct, indirect, consequential or incidental loss or damage arising out of or in connection with your use of the information provided.