VAT on hotel payments received in advance

VAT on hotel payments received in advance

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I am doing the book-keeping for a hotel that charges in advance for any room bookings made. Their weekly in house reporting gives a report that shows:

1) deposits (full payments) received

2) deposits (full payments) honoured (ie customer who has paid in advance has stayed in the hotel during that week)

3) the total accommodation income for that week based on deposits honoured and last minute bookings / walk ins. 

At which point do I account for VAT? For the previous 2 VAT returns I have used 3) as the taxable date as it is the point of supply.

If this is wrong, how would I account for VAT going forward?

Thanks in advance.

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By User deleted
27th Nov 2014 16:39

If ...

... the deposits are nothing more than advance payments for the supply of rooms etc, then they are VATable when received. Should the guest not turn up, and the deposit forfeited, then the VAT treatment changes - no supply, no VAT.

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By Crash
27th Nov 2014 17:39

VAT Notice 709/3 refers7. Deposits, cancellation and other charges

7.1 Deposits

Most deposits serve as advanced payments, and you must account for VAT in the return period in which you receive the payment. If you have to refund a deposit, you can reclaim any VAT you have accounted for in your next return. 

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