Commentary

V6.261 Liability of supplies and activities of the hotel and holiday sector

Part V6 Business by business

V6.261 Liability of supplies and activities of the hotel and holiday sector

Hotels and Holiday Accommodation

V6.261 Liability of supplies and activities of the hotel and holiday sector

Introduction

Although the holiday and hotel sectors are primarily concerned with the supplies related to land, the majority of these are specifically excluded from exemption. As such, most supplies will be subject to VAT at the standard-rate.

However, the sector can be far from straight forward from a VAT perspective. The types of accommodation treated as falling within the exclusions from exemption may be surprising. Furthermore, businesses providing accommodation may find that they make a mixture of both taxable and exempt supplies that brings them into the scope of partial exemption. Others may buy in supplies in related areas (eg travel), causing them to fall within the Tour Operator's Margin Scheme.

This article examines the liability of key supplies and activities in the hotel and holiday sector and V6.262 looks at VAT recovery and other practical points of particular interest to the sector.

Liability of supplies in the hotel and holiday sector

Accommodation in hotels, inns, boarding houses and similar establishments

Whilst there is a broad exemption for supplies of land, the supply of accommodation in hotels, inns, boarding houses and similar establishments is specifically excluded from exemption. Therefore most supplies of accommodation in the hotel sector will be standard-rated in principle. The scope of this exclusion from exemption is described in at V4.113F.

Long-term stays in hotels etc

Although accommodation in hotels inns, boarding houses and similar establishments is normally standard-rated, a special valuation rule applies in

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