This reduced VAT rate of 5% (from 20%) applies to the hospitality, hotel and holiday accommodation sector. The change comes into effect on 15 July 2020 and runs until 31 March 2021 (originally 12 January 2021 but extended on 24 September 2020).
There's a few points to note for continued use of AutoEntry during and after the changes are in effect. The main changes will occur 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 VAT rate into AutoEntry:
AutoEntry does not automatically populate changes in your accounts package into AutoEntry. To update the VAT rate changes in AutoEntry, once made in your accounts package, simply go to the integrations 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.
You may have already saved settings for suppliers with your normal VAT rates. For supplier invoices that have the new 5% VAT rate, these simply need to be remembered again with the new 5% rate selections. There is no need to delete previously-remembered settings as these will not apply where 5% VAT is present on the invoice, and will be needed again for transactions after 12 January 2021.
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%, 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% and the new 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.
And if you do have any queries, 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.