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HMRC internal manual

VAT Land and Property

From
HM Revenue & Customs
Updated
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Hotels and similar establishments (Item 1d): rooms used for catering

In the first instance you must establish that the taxpayer is providing accommodation in a room or rooms within a hotel, inn, boarding house or similar establishment. Then it remains for you to decide if the accommodation is being supplied for the purposes of, or in conjunction with, a supply of catering.

Item 1(d) provides that the supply of a room in a hotel, inn or similar establishment for the purpose of a supply of catering is standard-rated. That applies regardless of whether the catering is supplied by the person supplying the room or a third party. If a room is supplied that is not for the purpose of sleeping accommodation, or for a supply of catering, that supply is exempt with an option to tax. This is still the case even where people using the room eat in the dining room, paying for their meal separately.