It has long been the case that the letting of land is exempt from VAT, except where an option to tax has been made over the land or buildings in question. This exemption also applies to the grant of a licence to occupy land, i.e. for a period shorter than would typically apply under a lease, such as an afternoon or an hour provided the licensee had exclusivity of occupation for that period.
HMRC’s view is where the purpose or significance of a letting was for a supply of catering, such as a party or wedding reception, then exemption could not apply and the supply would be taxable regardless of whether an option to tax had been made over the property.
It was confirmed in the Chewton Glen Hotels Ltd case where the hotel supplied a venue for wedding receptions but did not supply the catering for the reception that a room could be supplied for the purposes of a supply of catering (and therefore be automatically taxable) even when the person supplying the room did not also supply the catering.
The Upper Tier Tribunal in a recent decision which could have an impact on both the Hospitality and Education Sectors has now decided in the case of Blue Chip Hotels Ltd that when a room which is not subject to an option to tax, but which has been approved for the carrying out of marriages and civil partnerships is supplied, then this too is a taxable supply regardless of whether another part of the site was used for hosting the wedding reception or not.
The Tribunal has held that by obtaining approval for the use of a room for the solemnisation of marriage and the formation of civil partnerships and performing all the required activities to maintain such approval, the role of the venue was far more active than had there been a simple letting of immoveable property, and as such it fell outside the exemption.