Its 1st October 2021, you may be having to deal with four rates of VAT.
The supplies by the hospitality industry that have been subject to VAT at 5% since July 2020 will now become liable to VAT at 12.5% for the period between 1 October 2021 and 31 March 2022.
Credit notes
In respect of sales invoices or advance payments received at the rate of 5% VAT before 1 October 2021, which is subjected to an adjustment after this date, due to valid reasons such as an order cancellation or price adjustment, the VAT rate for the credit note will be based on the rate that was originally charged. In other words, the rate of VAT to be used for a credit or debit note is the one which was in force at the time of the tax point of the original supply. You may refer HMRC’s guidance: VAT Notice 700, para 18.2.5 to learn further on this.
Corrections
When you issue a credit note or receive a debit note, you must adjust the records of the taxable supplies you have made & your output tax
The accounts or supporting documents must make clear the nature of the adjustment and the reason for it. If you have charged or claimed an incorrect amount of VAT and have already declared it on your VAT Return, you need to follow the appropriate method of error correction. You may refer Section 4 of VAT Notice 700/45 on How to correct VAT errors and make adjustments or claims.
Flat Rate Scheme (FRS) – Changes to VAT Rates
From 1 October, the FRS rates will be increased for the following three categories:
- Catering services including restaurants and takeaways: 4.5% will increase to 8.5%
- Hotel or accommodation: 0% will increase to 5.5%
- Pubs: 1% will increase to 4%
Businesses that do not complete calendar quarter VAT returns will require special focus since there will be two FRS rates for VAT returns ending at the end of October or November.