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Reminder to businesses in the hospitality sector: VAT rate has reverted to 13.5%

The VAT rate which applies to certain goods and services has increased from 9% back to 13.5%

What is changing with the VAT rate?

On 01 November 2020, in response to the COVID-19 pandemic, the government introduced the temporary 9% VAT rate for certain goods and services, mainly in the tourism and hospitality sector. The Government has extended the expiry date of the 9% VAT rate several times but have signalled that there will be no further extensions beyond 31 August 2023.

From 01 September 2023 the VAT rate has reverted from 9% to 13.5%.

There are numerous goods and services that will be affected by the increase in the VAT rate including:

Certain types of food and drinks in restaurants, cafes, take-aways etc.
Hotel, guesthouse, B&B and similar accommodation
Admission to attractions like museums, exhibitions, cinemas etc.
Hairdressing services

How does the VAT rate change impact my business?

If your business supplies the types of goods and services mentioned above you will need to make sure that the correct VAT rate is applied from 01 September 2023 onwards.

Your September VAT will not be due to Revenue until you file your September/October 2023 VAT return but it is important to take the necessary steps now to ensure you are compliant.

What to I need to do now?

In practical terms you will need to have your computer and till system set up to adapt to this change and ensure you are charging the correct 13.5% VAT rate on the relevant goods and services.

Your system needs to be able to calculate different rates of VAT as some transactions may include goods or services at different VAT rates.

Because this was previously the VAT rate for your industry it should be a code that exists on your system already and therefore a straightforward enough recoding exercise to ensure you are charging the correct VAT.

Warehoused VAT debts

If you have outstanding Warehoused VAT debts with Revenue these are dependent on being up to date with your current VAT returns. Ensuring the correct 13.5 VAT rate is applied is essential to meeting this condition.

9% VAT Rate

The 9% VAT rate applies to magazines, newspapers, periodicals etc. and the provision of sporting facilities by profit making bodies. These services and products are not affected by the changes to the VAT rate and still qualify for the 9% rate of VAT.

Outsourcing your VAT Returns

Many companies outsource their VAT returns to professional accountants. Errors on VAT returns, late VAT returns and late VAT payments can all lead to penalties and possibly interest being charged. Allowing an accountant to take care of your VAT affairs, not only gives you peace of mind, but it should also avoid you wasting your hard-earned cash on penalties and interest. Learn more about how we can help here

Date published 5 Sep 2023 | Last updated 5 Sep 2023

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