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British Marine receives clarity on the reduction in VAT for holiday accommodation

Published on: 15 July 2020

canal holiday

On 8 July 2020, the Chancellor of the Exchequer provided an update on the measures HM Treasury would take to support businesses following the COVID-19 pandemic.  

Included in his announcement was a VAT cut to 5% for the tourism and hospitality sectors for a six-month period (15 July 2020 to 12 January 2021).

In a communication on 14 July, HMRC confirmed to British Marine that the reduction of VAT to 5% for holiday accommodation does not apply to those businesses hiring recreational craft with overnight accommodation, nor does it apply to mooring providers for any vessels. The reduction in VAT to 5% would only apply to those providing holiday accommodation on houseboats.

HMRC have provided further clarification and definitions of “Houseboats” in their guidance notice “Hotels and holiday accommodation (VAT Notice 709/3)”.

For those wishing to seek clarification on this definitive position from HMRC, British Marine would recommend contacting the HMRC National Call Centre on 0300 200 3700 and quoting the call reference number ‘DBS-10912’  for confirmation of this position.

British Marine is disappointed by this decision and believes that by not including our industry within the scope of holiday accommodation for VAT purposes, HMRC is supporting anti-competitive activity by favouring other industries in the tourism sector. British Marine will therefore now be challenging HMRC’s position to ensure there is a level playing field for all holiday accommodation providers.

Further information for eligible businesses

For those members who are eligible to reduce their VAT to 5% for qualifying goods and services (such as holiday accommodation in houseboats or food in restaurants), British Marine’s VAT advisors, PKF Francis Clark have provided a useful update for members:
Members can also contact PKF Francis Clark directly for further assistance. 

Please follow the link for more information and to take advantage of this service: 

For the sake of clarity, the new VAT rate is applicable on all invoices raised on or after 15 July 2020. Any invoices raised prior to this date a 20% VAT rate is applicable.

Where a price has been agreed with a customer, but no invoice raised, British Marine believes that the price should now be the agreed price plus 5% VAT. To ensure that customers are treated fairly, there should be no alteration of the price (excluding VAT) to reflect the change in VAT. During this time, members should also remind themselves of British Marine’s code of practice which requires members to treat customers fairly and courteously.

Schedule 3, Section 2.2 Dealing with Customers states:

i) Members should strive to maintain the best practicable standard of service to their customers, having regard to the nature and price of the goods and services supplied, at all times. Customers must always be treated fairly and courteously. 
ii) Members shall not deliberately mislead their customers in any way and must ensure that all promotional material is accurate.  
iii) Members shall provide their customers with accurate and reliable information as to price, specification and time of delivery of their products or services.  

To view our full Code of Practice, please visit 

For members wishing to stay up-to-date with the latest developments on COVID-19, please visit our dedicated Coronavirus Hub.