Do you think that the supply of a room for a wedding ceremony is VATable? HMRC say “I do”

A recent VAT Tribunal decision means those providing licensed wedding venues should check their VAT position.

Blue Chip Hotels Limited (BCH) had a room which was approved under the Marriages and Civil Partnerships (Approved Premises) Regulations 2005 (the ‘Approved Premises Regulations’) as premises in which civil marriage ceremonies could take place. Other parts of the hotel were available for wedding receptions. Customers could choose to have a mix of ceremony/reception scenarios either within the hotel or away from the hotel for the reception.

Whatever was decided, BCH treated the hire of the room for civil wedding ceremonies as a supply of land which was exempt under Group 1 of Schedule 9 to the Value Added Tax Act 1994 (‘VATA94’). HMRC considered that where a customer held both a ceremony and a reception in the hotel as part of a wedding package, the supply was not exempt but subject to VAT at the standard rate on the hire of the room.

BCH appealed to the First-tier Tribunal (Tax Chamber) (‘FTT’). who dismissed the appeal.  In the Decision, the FTT held, first, that the supply of the hire of the room was a separate supply for VAT purposes even where it was sold as a part of a ‘wedding package’ which included the wedding ceremony and other services such as catering and the hire of other rooms.

The FTT then went on to hold that the separate supply of the room was not an exempt supply of the “grant of any interest in or right over land or of any licence to occupy land” within Item 1 of Group 1 of Schedule 9 to the VATA94 or “the leasing or letting of immovable property” within Article 135(1)(l) of Council Directive 2006/112/EC (‘the Principal VAT Directive’) but was a standard-rated supply.

The reason given by the FTT for this conclusion was that the provision of approved premises in which a civil wedding can legally be carried out is beyond the “passive letting of land” and outside the scope of the exemption for leasing or letting of property.

BCH appealed against the FTT’s decision that the supply of the room was standard rated. The issue being whether, as BCH contended, the hire of the room was a supply of the leasing or letting of immovable property and exempt or a supply of something other than a leasing or letting of immovable property and standard-rated, as HMRC argued. The UTT concluded that the hire of the room was not an exempt supply of immovable property and BCH’s appeal was dismissed.

The UTT agreed with the conclusion of the FTT, although for different reasons. They didn’t consider the right of the customer who hires the room to be one of participation in a wider event organised by the supplier.

To hold a legal wedding ceremony approved under the Approved Premises Regulations, meant that the service provided by BCH was not simply making a room available to a customer, it was the provision of an approved room for a marriage ceremony and all the obligations and responsibilities that came with it. This went further than just making sure that the use of the room was not disturbed by third parties. Significant value had therefore been added to the supply of the room. For these reasons, the supply of the room was considered outside the scope of the exemption for the leasing and letting of immovable property.

If you are a business providing licensed wedding facilities and you would like us to consider your VAT position, please contact David Barraclough, our ex HMRC VAT Consultant, by emailing him at david.barraclough@wrightvigar.co.uk or call him on 01522 531341 or 07872 463833.