From 3 to 31 August 2020 businesses that offer a discount under the The Eat Out to Help Out Scheme are able to claim the discounted amount back from the Government.
Whilst on the face of it you might expect VAT only to be payable on the discounted amount, in-fact VAT is payable on the total consideration in the period that the sale occurs, i.e. the amount paid by the customer, plus the amount claimed back from the Government.
In addition, the business may also be able to apply the reduced rate of 5% VAT, which is applicable for transactions between 15 July 2020 and 12 January 2021.
As businesses are likely to need to make manual adjustments to their VAT account to recognise the correct amount of VAT, detailed record keeping will be required to support any adjustments made.
At Whiting & Partners we are doing everything we can to help ease the burden you and your business are under during these worrying and uncertain times. If you would like to speak to someone about VAT please reach out to your usual Whiting & Partners contact.