Accounting for VAT - Credits on purchases

MircoGambini Registered Posts: 2

I work in a hotel and, for some reservations, we offer a credit against food and beverage charges posted into the guest's account.
These charges (as we know) are vatable. Yet credits offered are VAT free.

I contacted HMRC and they told me credits should be VAT free but I am not sure about how they justify this stand.

Could anybody confirm to me if we ought to keep these F&B credits VAT free and why?

Kind Regards,



  • rwb
    rwb Registered Posts: 32 Regular contributor ⭐
    I don't know the answer but suspect it is because VAT is a tax on the end user. By issuing the credits you are effectively 'giving away' the food and drinks the credit is used against, in which case you are the end user and lI able for the VAT.

    When you sell food/drinks the individual buying from you is the end user - so you have to charge them VAT.

    I am happy to be contradicted though!
  • MircoGambini
    MircoGambini Registered Posts: 2
    Thank you rwb
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