Thousands of licensed wedding venues are increasingly being warned to check their tax position after a recent Tribunal decision left one hotelier that has a bill of over 50,000 for unpaid VAT.
The decision now puts other licensed wedding venues in danger of being audited because of the taxman to find out how they be the reason for VAT.
The case was due to Blue Chip Hotels Limited, individuals who own the Glendorgal Hotel in Newquay. HMRC assessed this company for more than 50,000 of underpaid VAT amongst the hire in the hotel’s Tamarisk Room, which was licensed to host civil marriage ceremony.
HMRC argued that VAT needs to have been charged to the Tamarisk room hire charge if your hotel was utilized to host the wedding ceremony reception. The place was forced to prove which the payment services within the Tamarisk room was a VAT-exempt flow of land, regardless of other services it provided the wedding ceremony party.
The Tax Tribunal agreed with HMRC that hire on the room was governed by VAT along at the standard rate of 20%, nevertheless for an alternative reason than that argued by HMRC. Due to this fact, the provider will now have to pay HMRC’s assessment unless it appeals.
The Tribunal found that if your Tamarisk Room is hired together with a wedding event package, only one VAT-able supply is now being provided. While this broadly supports HMRC’s policy, the Tribunal went further and suggested how the provision of licensed premises where a civil wedding could legally be conducted shouldn’t be considered a VAT-exempt ‘passive letting of land’, a degree that HMRC has accepted until now.
As a wedding event licence must pay the general public entry to a wedding ceremony, wedding couple couldn’t develop the ‘exclusive’ using the room needed to exempt the availability from VAT. The hire in the room for any ceremony was therefore an outside supply, be subject to VAT.
Steve Hodgetts, pictured, a Midlands-based VAT partner at RSM said: “Organising a wedding is amazingly expensive and also this decision implies that engaged couples will be considerably more unlikely every single child make use of a licensed wedding venue it doesn’t charge VAT.
“There is also a real danger that hotels should find themselves coming under HMRC’s microscope. 100s of venues offering licensed wedding facilities now are susceptible to being audited by HMRC to view the way they be the reason for VAT. Recently, we’ve also seen an escalating willingness by HMRC to challenge or restrict VAT recovery on refurbishment of hotels correctly treating income as VAT exempt.?Hotels, farms, golf equipment, university colleges as well as other licensed venues would prosper to maintain their VAT position under review to prevent yourself from any unexpected and unpleasant surprises.”
