On the 8th July the government announced a temporary cut in VAT to 5% for specific suppliers operating in the hospitality, holiday accommodation and attractions sector. This change will come into effect on Wednesday 15th July and forms part of the government’s response to the current COVID-19 pandemic.
You can find more details on this announcement on the government’s website here.
If the majority of your supplies will fall into scope for the reduced rate, you may wish to update your QuickFile settings so that the rate of 5% VAT will be defaulted on all your new sales invoices.
You can find this option by going into the top menu “Account Settings” then “Advanced settings”.
Here are a few other areas you may need to look at to ensure your accounting remains accurate and consistent.
Do you have an active PayPal feed that is setup to auto-create new invoices? If the answer is yes and if you have elected to have VAT automatically applied, you may need to update your PayPal feed settings to apply the reduced rate of 5% VAT to all automatically generated sales invoices.
You can locate your PayPal feed settings by going into the “Banking” section, then view the PayPal statement and from “More Options” select “Feed Settings”.
Here you will find an option to set the default rate of VAT on sales.
If you have any bank tagging rules that are automatically generating sales invoices for supplies that are eligible for the reduced rate of VAT, you would need to update those rules accordingly.
We would recommend that you disable “Automatic Bank Tagging” as a minimum to ensure that you are able to manually review and confirm your bank tagging rule matches.
If you have a supplier who is in scope for the reduced rate of VAT on their supplies, you may wish to update that supplier’s default VAT rate in the supplier settings area. This will then ensure that any new expense items you create for that supplier will default to the new 5% reduced VAT rate.
Please first verify that the supplies will be made at the reduced rate before making this change.