AN ACCOUNTANCY firm is warning hospitality venues to prepare as VAT rates are set to more than double.

Brighton-based Carpenter Box has urged local pubs, restaurants, hotels and other leisure businesses to act as the government scales back its temporary VAT cut, introduced to support the hospitality sector and protect jobs.

VAT rates for the industry will jump from five per cent up to 12.5 per cent from October 1.

Dan Hobbs, partner and VAT specialist at the firm, said: “Businesses in the hospitality sector have no doubt benefitted from the temporary reduced five per cent rate of VAT.

“Whilst the increase to the new temporary rate of 12.5 per cent will be costly, it gives businesses some time to adjust before reverting back to the standard rate of 20 per cent.

“It is important that these businesses are aware of and are prepared for the changes. Businesses in the sector should also make sure they are taking full advantage of the reduced rate, ensuring it is applied to all qualifying goods and services.”

His top tip for businesses in the hospitality and leisure sector is to check and update their tills, invoicing and accounting systems ahead of the VAT hike next week.

He explained that these systems can be difficult to adjust and advised businesses to contact equipment or software manufacturers for support if necessary.

The full VAT rate of 20 per cent is set to be reintroduced for the sectors from April next year.

Dan said: “This is going to be a critical time for businesses in this sector and it is essential they seek professional assistance should they need it.”

The reduced rate for VAT for hospitality, holiday accommodation and attractions was first introduced in July last year, initially until January but it was later extended to the end of September.

The government’s rate reduction aimed to support the reopening of the economy, businesses and 2.4 million jobs as the first Covid-19 lockdown was eased.

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