Whether VAT should be charged on the supply of venues for weddings is a highly contentious area of VAT. There have been numerous Tribunal cases where a supplier has argued that it simply makes an exempt supply of land and HMRC has contested that facilities are also supplied making it a taxable composite supply.
A recent Upper Tribunal decision in the case of Blue Chip Hotels Limited (BCH) suggests that the supply of any room approved for marriage ceremonies will be subject to VAT at the standard rate.
BCH owns and operates a hotel in Newquay. The Tamarisk Room (the Room) within the hotel is approved under the necessary regulations as premises in which civil marriage ceremonies may take place. BCH treated the hire of the Room for weddings as a VAT exempt supply of land. HMRC considered the supply to be standard rated and assessed for VAT of £54,610 in respect of the VAT accounting periods 09/09 to 12/12. BCH appealed the assessments to the First Tier Tribunal (FTT) and the FTT dismissed BCH’s appeal.
The FTT first held that the supply of hire of the Room was a separate supply for VAT purposes even when sold as part of a wedding package. Secondly, the FTT found that the supply of the Room was not VAT exempt. The provision of approved premises is beyond the ‘passive letting of land’ and outside the scope of VAT exemption.
BCH appealed the FTT’s decision that the supply of the Room is standard rated to the Upper Tribunal (UT). BCH argued that the supply of the Room is a passive supply even if the room is approved for marriage ceremonies. HMRC submitted that customers looking to hire the Room did not merely want to hire a room. Use of the Room as a place to carry out marriages and civil partnerships adds significant value to the supply of the room. The Approved Premises Regulations impose significant responsibilities. The UT agreed with HMRC. BCH actively exploits the Room by obtaining and maintaining approval for use for the legal civil marriage ceremonies. This active exploitation of the Room adds significant value and for this reason the UT ruled that the supply of the Room is outside the scope of VAT exemption.
Any venues which are currently treating supplies of an approved room as VAT exempt should consider whether this decision affects them, particularly where a property is licensed or approved for an additional service to be supplied. It is possible that following its success at the UT HMRC will target wedding venues to ensure supplies of rooms in similar situations to the BCH case are treated correctly.
If you operate a wedding venue and would like to discuss the VAT implications of your supplies please do not hesitate to contact us on 01206321029 or firstname.lastname@example.org and one of our consultants will be happy to speak to you.