New VAT rate of 12.5% for the hospitality industry from October 2021

Who would have believed it? From 1 October 2021 to 31 March 2022 we will have four rates of VAT to deal with for the first time since 1979 because of the temporary rate of 12.5% that will apply to the hospitality industry. This is very different to the two rates of 0% and 15% we had when I first started working with the tax nearly 40 years ago. So much for tax simplification! Is there a chance that we could soon overtake the Italians who have five rates? If we could beat them 6-5 this might be sweet revenge to make up for them beating us in the Euros 2021 football final.

The 12.5% rate will replace the reduced 5% rate that has applied to most hospitality supplies since July 2020. The practical issues must be considered by both suppliers and customers; don’t think it is only...