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Reduced Rate Vat Query

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I have a client who operates as a residential outdoor adventure activity centre with clients who range from school groups to day adventure seekers. Accommodation, meals, instructors and equipment are all in the package. In relation to the Reduced Rate Vat Update issued 9 July 2020, I see that at Pare 2.1 there is a definition of 'Similar Establishments' but I'm left uncertain about status of my client. Client has called Customs and been told that they are covered by Reduced Rate Vat but conversation closed with Customs Officer pointing out that Vat Payer has to interpret Customs Guidance (I know they always do this!). I am concerned about the uncertainty for my client. Any thoughts out there?   

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By paul.benny
10th Jul 2020 13:11

Hospitality - check
Holiday accommodation - check
Attractions - check

Your client's business seems to me to tick all the boxes for the temporary reduced rate.

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By Iain G Allan
10th Jul 2020 13:56

Thanks Paul for timely comments. However, my client is a residential outdoor adventure activity centre. 90% of their annual turnover is from taking school groups for a week and skilling them with leadership qualities through outdoor adventure tasks. Yes, they provide the overnight accommodation and meals to these kids but I don't think that takes them into the 'Hospitality and Tourist' trade. As an aside they run day kayak trips for family tourist groups but honestly this would be less than 10% of their total annual turnover.
You can see my dilemna for the client could now go ahead and apply the 5% (invoicing schools with that) but may find on some later Vat inverstigation that the initial Customs phone call judgement was in fact incorrect, based on insufficient information from the client about their activities/turnover mix, etc

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chips_at_mattersey
By Les Howard
10th Jul 2020 14:07

We have found that some activity centres are exempt, under the welfare provisions.
You will need to look at the non-profit status (as that is a condition for exemption).

I would wait for the legislation to be published and perhaps engage a specialist to provide a thorough review.

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By Iain G Allan
10th Jul 2020 14:20

Appreciate your response Les. Our long standing client does not fall within the exempt income provisions. I agree that engaging a specialist on this one is probably the only and safest option or, if its possible, getting a written technical decision from Customs based on full client disclosure of their business nature/turnover mix/customer base, etc

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By MRA
14th Jul 2020 12:38

Hello,
Did you manage to reach a conclusion with this?
I have a very similar client and am happy that the bunkhouse accommodation should be 5% however am struggling with how the activities should be treated.
There is no 'admission' charge and I cannot see how else it qualifies.
Thanks in advance
M

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