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East Midlands Chamber News

Retained deposits lose VAT exemption

Businesses that take retained deposits will no longer be exempt from VAT on those payments from tomorrow (1 March), Leicestershire accountancy firm Newby Castlemanwarns has warned.

 

Deposits are retained when a payment is made to secure bookings for goods or services which are subsequently not taken up.

 

Hotels, restaurants and other such businesses have been exempt from VAT on retained deposits, and kept these payments as compensation for having held a table or room, for example.

 

Following two recent European Court rulings, companies whose services require customers to make a deposit or down-payment from tomorrow will be responsible for paying VAT to HMRC on deposits where the service or goods are not used or collected.

 

Brent Goodwin ACA, VAT Manager at Newby Castleman, said: “It’s important that businesses are aware of this upcoming policy change.”

 

Newby Castleman is a Midlands-based independent accountancy firms, with offices in Leicester and Loughborough. It offers a range of specialist financial services, business and tax advice for individuals and businesses.

 

For further information, visit the website at www.newbycastleman.co.uk.

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