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HMRC internal manual

VAT Land and Property

Hotels and similar establishments (Item 1d): the reduced value rule ('28 day rule')

Supplies by hotels or similar establishments of accommodation for asylum seekers are often made to the Home Office or local authority. In such cases, the reduced value rule will still apply from the 29th day of each individual’s stay.

However, accommodation provided for a succession of different individuals for periods of less than 29 days will not qualify for treatment under the rule. Details about how the reduced value rule works can be found in Notice 709/3 Hotels and holiday accommodation and V1-12 Valuation. It should be noted that where breakfast is provided as a food parcel the tax exclusive cost to the proprietor will be accepted as the element of the charge relating to food. Where vouchers are used, the food element is always taken as the voucher cost.