BUSINESSES and attractions set to benefit from the Government’s temporary VAT cut are being warned that failing to prepare now could lead to a quarter-end headache.
Accountants at JF Hornby & Co are urging organisations across hospitality and the visitor economy to review systems and processes immediately to ensure transactions are being recorded correctly ahead of the next VAT filing period.
The firm says the reduced five per cent VAT rate on children’s tickets, meals and qualifying offers – which came into effect on June 25 and is intended to support families during a period of continued cost pressures – could create additional complexity for businesses if introduced without proper planning.
Warning: Paul Hornby
Paul Hornby, Managing Director at JF Hornby & Co, said: “Measures that make days out and family experiences more affordable will be welcomed by many households, and I hope businesses are able to pass savings on where they can, so families feel the benefit.
“At the same time, hospitality and the visitor economy continue to operate in a difficult environment with ongoing pressure from wages, utilities and wider operating costs, so the reality will not be the same for every organisation.
“What businesses should not do in any event, is underestimate the administrative impact of introducing different VAT treatments into existing pricing structures and systems.
“Where organisations have mixed offers, bundled packages or multiple transaction types, there is potential for confusion if systems are not set up correctly from the outset.
“It can be tempting to leave VAT administration until quarter-end, but that often results in finance teams trying to unravel months of transactions retrospectively – and that is where mistakes, delays and unnecessary stress can arise.”
JF Hornby is advising affected businesses to review till and booking systems, check how transactions are categorised, ensure finance reporting reflects the changes and brief operational teams on any new processes.
Paul added: “This is one of those situations where a small amount of preparation now could save a significant amount of time later.
“The policy intention is clearly to support families and stimulate activity, but from an accounting perspective businesses need to make sure they are able to evidence how transactions have been treated and maintain accurate records throughout the quarter.
“The businesses that handle this best will be the ones that take time now to plan, test and implement the changes properly rather than trying to fix issues once returns are due.”
