There are a 2 areas that we would like to draw to your attention.
Duty Deferment
You may be aware that we operate a duty deferment account with HMRC in order to speed up the process of importing goods. This account defers the payment to HMRC until a later point when importing goods and can reduce delays linked to duty and VAT costs on imports.
Given that a no deal Brexit would likely result in us making use of the duty deferment account more frequently we wanted to make you aware of some important points:-
- Please ensure that when importing goods that you provide our duty deferment number to the import agent, our number is 8885282. Note that there will still be duty/ VAT charged, where applicable, however this will avoid additional charges by the shipping agent.
- The duty/ Import VAT will then be charged centrally to the University and will need to be recharged to your school/department. Therefore following shipment of an order, please send the waybill reference, shipping agent, value and the Agresso coding string (account, cost centre, job/project and site code) to the VAT Office (VAT@kent.ac.uk).
Deposits on cancelled bookings – VAT
We would also like to make you aware that HMRC have recently changed the VAT treatment of retained payments and deposits for goods or services. This means that if we hold on to a deposit even if the booking is cancelled we need to account for the VAT at the same rate as we would the actual supply. The changes come into effect on 1 March 2019 and it means that we need to ensure that deposits we receive have the same VAT code as the supply we intend to provide. To ensure that this is a simple as possible when a deposit is received please ensure that the VAT code is applied at the same rate as the supply would be i.e. a hotel booking would be standard rated (tax code S) therefore the deposit should also be recorded as tax code S. This will mean that if the booking is cancelled and the deposit is not returned the correct treatment is applied without any changes being required in Agresso.
Where we have a booking that is made before 1 March 2019 but the activity is after that date we need to consider when the cancellation takes place. If it is before 1 March then the deposit is outside the scope of VAT however if it is after then the new guidance applies and it would need to be the same as the actual supply.
To illustrate:- please find the example provided below is as follows:-
A hotel room is booked on 4 January 2019 for a one night stay on 17 March 2019. The price is £100 plus £20 VAT. The hotel takes payment at the time of booking. The customer has no entitlement to a refund in the event of them cancelling or not using the room.
The hotel must account for the VAT when the payment is first made.
If the customer cancels the booking before 1 March 2019, the hotel may make an adjustment and treat the £20 VAT as outside the scope of VAT.
If the customer cancels on or after 1 March 2019 or does not use the room, the hotel cannot adjust the £20 VAT as the new policy will apply.
The actual effect:-
The effect will be that from 1 March 2019 you will need to pay VAT on retained deposits if the booking is cancelled at the rate the activity would be recorded at. If the activity is exempt from VAT then the deposit will be exempt and there will be no real effect.
However where there is a standard rated supply before we would have been able to retain the full deposit whereas from 1 March 2019 we will need to ensure that VAT is paid over on the amount thus reducing the value of the retained deposit.
We anticipate that this will mainly effect those in the Conference Office, those who take bookings for non-student accommodation and Kent Sport.
If you have any queries please contact us via e-mail or phone on 3881 (Aidan) or 7487 (Rich).