VAT advice for the hospitality & leisure sector

Aug 24, 2017 | Blog, VAT compliance, VAT strategy

Any business operating within the hospitality and leisure sector will have crossed paths with VAT. From the impact it has on margins, to knowing when to become VAT registered, to how to reclaim VAT and knowing whether a specific transaction falls within the VAT net at all; it can take some navigating.  The complex nature of VAT legislation means that it can be easily misunderstood, potentially resulting in costly unanticipated VAT costs.

This blog provides an insight into four specific – yet often related, topical issues:

  1. The 28 Day Rule
  2. Serviced Apartments
  3. Fishing
  4. Shooting Syndicates

The 28 day rule

Sleeping accommodation in a hotel, or similar establishment, is generally subject to a charge at 20%. However, less commonly known, if an individual stays for more than four weeks, a reduced charge would apply, providing relief for longer term residents in hotels or inns; this is known as the ‘28 day rule’. Do you know how to apply this rule?

Serviced Apartments – don’t think they are exempt

Short term accommodation in a serviced apartment will also be potentially subject to 20%; not to be confused with exempt residential lettings. HMRC’s rationale is that taxing such accommodation is necessary given that it competes with the hotel sector. The 28 day rule applies equally to serviced apartments and can perhaps be more of a common occurrence given the nature of the accommodation. Do you realise that you may need to be registered and be charging value-added tax accordingly?

A Spot of Fishing

Paying to fish in someone’s loch or river, would usually incur a charge at 20%, assuming they are registered. This applies equally to fishing in a still water fishery, however if it is optional to either pay for fish caught, or to throw them back, any charge for the fish themselves is in fact zero rated if they are of a species generally used for food in the UK. Are you charging at the correct rate?

What About Shooting Syndicates?

Allowing someone to shoot on your land is subject to a 20% charge but what if the shoot is arranged as a syndicate?

Shooting syndicates can take many forms with the value added tax position varying from a pure cost sharing arrangement, which does not usually amount to business activity, to value added tax registration potentially being an issue dependent on the underlying terms of the arrangement. Are you comfortable that your syndicate does not fall “fowl” of the rules?

The Whole Package!

While your business may have just one of these factors to consider, it is commonplace for a business to supply accommodation, along with shooting, fishing or maybe even golf. A “packaged supply” of this nature does need to be considered in the context of the dreaded Tour Operator’s Margin Scheme (TOMS); a perplexing VAT scheme which we would recommend you always take advice on.

We are well aware of the challenges that VAT can pose for businesses and business owners – what is reassuring for clients is that, to date we have rarely encountered a VAT issue that can’t be solved.

This full understanding of the complexities and implications of VAT and how these are applied to real business scenarios, gives clients simple to understand, no nonsense advice that they can reply upon.

To get in touch with us email or call us on 01383 721421.

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