HB Accountants

January

Reduction in the standard rate of VAT

The standard rate of VAT was reduced from 1 December 2008 from 17.5% to 15%. HMRC have published some further frequently asked questions which clarify the correct treatment in several situations.

One situation which helps to explain the complexity of the issue is as follows:

'Treatment of tickets to events (theatre, football season tickets etc):

1. I am a concert promoter. I do not issue VAT invoices but received payment in October 2008 for a concert that will take place in April 2009. Can I adjust the VAT?

The short answer is no. The special rules for supplies spanning the change in the VAT rate apply where payment is received (or a VAT invoice is issued) before 1 December 2008 where the goods are to be supplied or services performed on or after that date.

In the case of tickets to a concert (or theatrical performance etc) what you are selling is the right to attend a particular event. As in this instance the right to the event was granted in October 2008, the supply does not span the change in the rate and VAT of 17.5% should be accounted for.

The same principle applies to football season tickets. If these were bought and paid for prior to 1 December 2008 they are subject to the 17.5% VAT rate with no scope for adjustment

 

Update 21 January 2009

Since the above guidance was published on 8 December 2008 it has become clear that a number of businesses were not aware of HMRC's view of the correct VAT treatment of tickets to events. Some have assumed that where a ticket was sold prior to 1 December 2008 for an event due to take place on or after that date that the 15% rate should apply.

Where a business has mistakenly refunded its customers the difference between the 17.5% VAT originally charged on ticket sales and the 15% rate HMRC will operate a light touch and will not seek to r

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