(scotland) Limited
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  • 0141 636 9490
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UK Government Promise
“VAT will be a simple tax”
(Anthony Barber
Chancellor of the Exchequer)
The Reality
(since 1973)
“VAT is like a fiscal theme park, in which factual
and legal realities are suspended or inverted”
(Lord Justice Sedley 2001)
The Solution
Promises and reality are often different in Government.
Our mission at VAT Services (Scotland) Ltd is to try to make the reality simple and
understandable for your staff, so that your business or organisation complies with VAT regulations
with as little difficulty as possible. We do this by offering:


Since 15 July 2020 the hospitality sector has enjoyed a reduced VAT rate of 5% and not the usual 20% rate on a number of specific services. This reduced rate applies to restaurants/cafes (excluding alcohol), hot takeaway food, holiday accommodation and admission charges for some attractions.

However, this reduced rate of 5% is returning to the 20% rate in two steps. As of 1 October 2021, the rate will increase to 12.5% and then from 1 April 2022 the rate will return to original level of 20%.

As almost all businesses have not passed on this reduced VAT cost to their customers by keeping their prices the same, these businesses will therefore continue to have increased income equivalent to the reduced amount of VAT being paid over to HMRC, albeit a reduced one from 1 October 2021.

It is important that businesses affected by this VAT rate increase from 5% to 12.5% amend their VAT accounting systems to ensure output tax (VAT) is correctly accounted for. Businesses, where required, should seek advice on how to amend their VAT accounting systems by contacting their accounting software supplier (Xero, Sage etc).

We provide a link to HMRC’s guidance on this topic since the introduction of the reduced rate from 15 July 2020 to the last update on 3 March 2021. The link can be accessed HERE