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HMRC internal manual

VAT Land and Property

Hotels and similar establishments (Item 1d): wedding packages

It is now common for hotels and similar venues to provide a package of services for weddings. Recent changes in the law have also meant that such establishments are able to obtain licences allowing civil marriages to take place on their premises. The packages may therefore include a room for the ceremony, the wedding breakfast,(a buffet or a sit-down meal), floral decorations, the services of a toast-master, rooms made available for guests to change in, accommodation for the bridal party and others, hire of a cake-stand and knife, and use of a particular room for a disco/live music in the evening. In addition, guests will have access to the hotel facilities such cloakrooms, the grounds, car parking, etc. Some venues may also offer overnight accommodation to guests as part of the package.

Such supplies are treated as single taxable supplies of wedding packages. A number of tribunal decisions have supported this treatment, even where suppliers have attempted to separate out certain elements from the package. In Willerby Manor Hotels Limited (VTD 16673) the taxpayer argued that room hire was a separate supply which qualified for exemption. However, the tribunal dismissed the appeal, holding that the room hire was part of a “composite supply of a standard rated package of wedding reception facilities, the main ingredient of which was a supply of catering”.

A similar decision was reached in Leez Priory (VTD 18185) and more recently in Chewton Glen Hotels Ltd (VTD 20686). In the latter case the chairman concluded:

‘In cases where more extensive additional services such as reception, meals or dancing, etc are provided then it is realistic to regard the package as a whole as going beyond the hire of the room and services purely ancillary thereto’.

Best Images Limited TC 00480 concerned a venue let out by the appellant principally for Indian weddings. In this case it was normal for the catering to be supplied by a third party to the customer. However, in addition to the provision of the hall the appellant provided a number of additional support services. This included advice on such things as caterers, music and bridal outfitters; being on hand at the event to ‘give a personal family touch’ and defuse difficult situations; provision of chairs and tables and the availability of someone to ‘clean up when needed’. As a result of the company providing customers with, amongst other things, the benefits of its management, supervision and maintenance of the venue, the tribunal found that the appellant was not ‘conducting the passive activity of letting land’. It concluded that ‘…for a typical customer, its activities went far beyond merely providing the key to a door …’.

Conference facilities supplied by hotels

Conference facilities can be supplied by hotels in several different ways, the VAT treatment of which is as follows:

  1. hire of a conference room on its own: supply of a right over land, exempt subject to the option to tax. Supply of extras such as coffee, water, flipcharts etc is seen as incidental to the main supply. Most hotel chains are thought to have opted to tax conference facilities.
  2. hire of a conference room together with meal(s) for an inclusive charge (often described by hotels as “8 hour delegate rate”): the room hire and catering are treated as separate supplies. The consideration will need to be apportioned between the room hire which is exempt (unless the supplier has opted to tax) and the taxable supply of catering.
  3. hire of conference room together with meal(s) and overnight accommodation for an inclusive charge (often described by hotels as ‘24 hour delegate rate’): there are separate supplies of room hire (exempt - subject to the option to tax), accommodation (taxable) and catering (taxable), and where the supplier has not opted to tax the consideration will need to be apportioned.