VAT / Tax Change 1st October 2021 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 Friday 1st October)?
We recommend you complete the changes as near to the time the last End of Day closes on the evening of Thursday 30th September or early hours of Friday 1st October (depending on your EOD schedule). You can create any new analysis codes in advance of Friday.
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 Friday 1st October or only for bookings arriving after that date.
How do I handle deposits that are paid at 5% 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 5% to 12.5% on 1st October 2021, all deposits taken before 1st October 2021 will have the VAT of 5% calculated on them and 12.5% 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
How will the change show in my financial reporting?
Forecasting reports will be updated to reflect the new Net values once Guestline have performed the background reservation resaves. (Resaves are scheduled to be completed over the course of Friday and the following week after the Tax changes have been made).
The current/open EOW & EOM will show a mix of 5% & 12.5% VAT. Future EOD/EOW/EOM’s will sometimes show negative 5% as bookings with deposits taken pre the VAT reduction are checked-in.
Why does the guest room bill show a minus value on the 5% tax line?
Deposit received at 5%, will refund at 5% 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 12.5% and 5% 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.