VAT / Tax Change July 2020 FAQs
How will the change in Tax impact my Rates?
There will be no impact to the final price. By changing the tax rule on the analysis codes that make up the Rate, you will simply be changing the tax breakdown. If you wish to change your rates and pass on any savings to the customer, you will need to amend the rates in your Rate Tables or Flex Rate Table accordingly.
If a site is configured with Nett value Rate tables then the final rates would be affected
Can I change my Tax now (before Wednesday 15th July)?
We recommend you complete the changes as near to the time the last End of Day closes on the evening of Tuesday 14th or early hours of Wednesday 15th July (depending on your EOD schedule). You can create any new analysis codes in advance of Wednesday.
Should you wish to reconfigure your system with entirely new codes and rate plans to account for the Tax change, this can be done in advance, but you should not use this new config until Wednesday 15th July or only for bookings arriving after that date.
How do I handle deposits that are paid at 20% Tax for future bookings?
Any change made in the deposit tax rate will only apply to deposits taken after the change has been made. For example, if the rate of VAT was changed from 20% to 5% on 15th July 2020, all deposits taken before 15th July 2020 will have the VAT of 20% calculated on them and 5% on deposits received after this date. When a reservation that holds a deposit is checked in, the deposit will move from the Deposit Ledger to the In-House Ledger. The VAT on the deposit will be reversed, as the funds are now classed as payments not deposits. The reversal will be at the same rate of VAT that was originally declared on the deposit. Any VAT from this point on will be based on the analysis codes attached to the products posted onto the room bill / event bill.
Has Tax changed on Room Hire?
Tax on Room Hire where food is served - you will need to refer to the HMRC guidelines as they are specific with regards to light refreshments and full catering. Link below.
Tax on Room Hire where no food is served will be 0% rate. More information can be found on the HMRC website.
What happens to resident bookings who are staying over the period the Tax is changing?
Once you have made the relevant changes to the Tax option within the Analysis Code configuration, resident and future bookings will automatically post the rate plan using the newly applied Tax values. For long stay bookings where you will need to forecast revenue, we would recommend you manually reselect the rate plan within the booking to ensure reports update
What happens to Tax on reservations arriving after 12th January 2021 (next tax rule change)?
Bookings made now arriving after the next Tax change will be unaffected. If a deposit is paid, the tax will be calculated at the current rate and will update when checked-in (refer to the section above on tax on future bookings). The value of the reservation will remain the same (unless manually updated), and when the reservation is checked-in, the tax calculation will update accordingly (if the tax change process has been followed, and the analysis codes have been amended).
How will the change show in my financial reporting?
Forecasting reports will be updated to reflect the new Nett values once Guestline have performed the background reservation resaves. (Resaves are scheduled to be completed over the course of Thursday and Friday after the Tax changes have been made).
The current/open EOW & EOM will show a mix of 20% & 5% VAT. Future EOD/EOW/EOM’s will sometimes show negative 20% as bookings with deposits taken pre the VAT reduction are checked-in.
Why does the guest room bill show a minus value on the 20% tax line?
Deposit received at 20%, will refund at 20% at the point the guest checks in. Tax is then recalculated on the services received at the point the invoice is raised. You may also see a split between the 5% and 20% entries if the guest has stayed over the tax change period.
For more general information around what is changing, please refer to the HMRC website.