Farmers hiring out land and buildings for wedding ceremonies may have to pay back thousands in back tax following a failed VAT appeal earlier this year.
Blue Chip Hotels failed in their appeal to overturn more than £50,000 in VAT. The company argued that, as it didn’t offer room hire for civil wedding ceremonies as part of its package, VAT was not due.
However the upper tribunal ruled that, to meet wedding license regulations, the hire would not qualify as tax exempt ‘passive renting of a room’ and would therefore be liable to VAT for the whole amount, totalling more than £50,000.
The case demonstrates that the hire of any room for similar purposes is unlikely to be VAT exempt when there are a number of regulations that a commercial provider is required to meet.
It also raises a number of considerations for farmers planning organised events on their property such as wedding receptions, or concerts held on their grounds. If HMRC challenge a VAT return, farmers could be liable to pay up to four years’ worth of back tax.
If you have any queries it is always best to check with your adviser. Green & Co have a dedicated VAT department who can advise on a whole range of VAT matters. To speak with one of the team contact us on 01633 871122.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.