Ceremony room hire not VAT exempt

A recent First Tier Tribunal VAT case has highlighted the need for hotels and other wedding venues to ensure that the correct VAT treatment is applied to the hire of a room for a wedding ceremony.

In the case of Blue Chip Hotels Limited vs Revenue & Customs Commissioners the tribunal heard that the hotel provided a number of services for weddings and civil ceremonies, including catering, function room hire and the hire of the licenced ceremony room.

These services were often marketed and supplied as a package, however the court agreed that the individual components could be separated and the services could be treated as a mixed supply.

The tribunal went on to find that the provision of the licenced room in which the ceremony could legally take place should not be considered a VAT exempt “passive letting of land” and therefore could not be exempt from VAT. Despite the hire agreement stating that the room was for exclusive use and could not also be used for any other purpose (e.g. catering), the ceremony room licence meant that couples could not exclude the public, so VAT exemption could not apply. The hire will be standard rated for VAT.

Hotels and wedding venues should therefore make sure the correct treatment is applied. Please contact our Leisure team to discuss this or any other relevant tax issue.