VAT rate on ticket refunds

[Bbob]

Hi.  We sell tickets for shows and in line with the Government corona virus scheme, we have reduced our ticket prices to reflect the drop in VAT from 20% to 5%.  Some of the shows have been cancelled and the tickets need to be refunded.  When dealing with the VAT on the refund do we use the VAT rate which was in place when the ticket was purchased or the new 5% rate?

For example, if someone purchased a ticket in April 2020 when VAT was still 20% and it now needs refunding, do we treat the refund as if it has 20% VAT because that was the rate when the ticket was purchased, or at 5% because that is the rate now?

Any help would be very much appreciated

[Trevor S]

You should use the same VAT rate on the refund as you did on the income. This is because you’re effectively cancelling the original transaction, rather than entering into a new transaction.

[Bbob]

Thank you very much – that’s the conclusion we came to so it’s nice to have it confirmed

[Author]

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