Ask the traveller: VAT increase
Wednesday 05 January 2011
I booked for a party of more than 40 people to go to Warners for a four-day bowling break in the spring. I recently received a letter requesting a further payment of £3.65 per person (£146 in total) for the new VAT increase. How can this be correct as payment has already been made in advance?
A puzzled reader
Yesterday, VAT rose to 20 per cent, its highest-ever level. While it might seem fair that the tax rate in force on the day you book should apply, HM Revenue & Customs takes a different view. The VAT liability depends on when the goods or services are actually supplied, ie when you take your spring break.
After the tax rise was announced in June, tourism businesses adjusted their prices accordingly. Warner Leisure claims it sent a letter in July to everyone in your position, saying that if you paid in full by the end of August, the firm would absorb the tax increase. As you didn't pay, the company exercised "the right to amend prices where there is an increase in VAT". However, I understand that the company has now removed the outstanding balance as a gesture of goodwill.
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