Hire of Room for Licensed Civil Marriages

In the recent case of Blue Chip Hotels Limited v HMRC [2017] UKUT 0204 the Upper Tribunal (UT) found that hiring out a hotel room for wedding ceremonies was not an exempt supply of land for VAT purposes and is therefore subject to the standard rate of VAT.

Two issues were identified by the UT as key in determining whether the hire of the room for the wedding was an exempt supply of land:-

  1. Did customers have a right to occupy the room as the owner, and exclude any other person from enjoyment of such a right?
  2. Did the taxpayer add any significant value to the hire of the space so that it was not merely a simple provision of space?

Applying these tests, the UT concluded that the supply of the room was not exempt from VAT:

  • The legal requirement that members of the public must be allowed access during ceremonies does not mean customers don’t have exclusivity: any owner would be subject to the same requirement.
  • However, the taxpayer did not simply make a room available: they actively exploited the room by obtaining approval for its use as a marriage venue and performing all the required activities to maintain that approval.
  • This went beyond what would be expected from mere letting of immoveable property: by its active exploitation of the room the taxpayer added significant value to the supply.

Hotels letting space for weddings, parties and other catered events must now account for VAT at 20% on their room hire charge which includes the hire of a room for a licenced ceremony. VAT should, therefore, be taken into consideration when quoting for future room hire for civil ceremonies.

If you would like to discuss VAT in more detail or you would like to speak with a member of our  team, please contact Jonathan Main or call on 01772 821021 to be put in contact with a member of our VAT team.