 Rooms hired for events
There has been a very recent decision by the VAT Tribunal in a case brought by Chewton Glen Hotels which may cause HMRC to change their policy on the VAT treatment of rooms hired out for events, such as weddings, parties and conferences.
The potential change will only affect hotels or other venues which have not “opted” to treat all their supplies as subject to VAT in any event. HMRC’s current policy on non-opted buildings is that hiring out a hall for a party is going to be free of VAT, although providing additional services (such as meals and/or entertainment) would normally make the entire package subject to VAT as an entertainment service rather than room hire.
Although in Chewton Glen Hotels the Tribunal agreed that the addition of minimum ancillary services to the room hire (such as use of car park and small amounts of food) did not convert the supply from room hire to VAT standard rated entertainment, it ruled that, nevertheless, following a recent European Court decision, the room hire was subject to VAT. This decision may therefore mean that hotels and similar venues may no longer be able to treat room hire for events as exempt from VAT.
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