Cornish Quay Holidays self-catering holiday cottages in Cornwall, UK

Change to the rate of Value Added Tax

Clarification of the position in relation to holiday cottages

Telephone: 01579 344667

What has changed?

In his Pre-Budget Report on 24 November 2008 the Chancellor announced that the standard rate of VAT would be reduced to 15% on 1 December 2008. The 15% rate will remain until 31st December 2009, and from 1 January 2010 it will revert to 17.5%.

What is the VAT position in relation to holiday cottages?

The situation is not the same as for example buying an item in a shop. It is made more complex because we act as Agents.

There is only VAT included in the price of a holiday cottage if the owner of the property is VAT registered. Currently none of the properties that we offer belong to VAT registered owners. Therefore the holiday prices advertised in our brochure and on our website do not include any VAT. Consequently there is no need to alter the prices and customers need not worry that they are paying VAT at the wrong rate.

Why does it mention VAT at 17.5% in the brochure?

We have used a standard wording in our brochure for many years which allows us to let properties on behalf of non-VAT registered owners and VAT registered owners.

The brochure went to print on the 7th November 2008 just before the Chancellor made his announcement and the VAT rate stated was correct at that time. We believe it would be a waste of resources to reprint the brochure to take account of the change particularly as it does not affect the pricing in any event. In December 2009 the rate will revert to 17.5%.

Why is Cornish Quay Holidays a VAT registered business if there is no VAT on the cottages?

Owners pay us a fee for marketing their properties and arranging the bookings on their behalf. Our turnover is in excess of the limit at which VAT registration becomes mandatory. This means the fees we charge owners are subject to VAT. In December we reduced the rate of VAT that owners pay in line with the Chancellor's statement.

Further information

Full details of the changes can be found at http://www.hmrc.gov.uk/pbr2008/measure1.htm

Please ask us if you would like any further information.