Reply To: VAT for Semi-independent accomodation providers

Forum Categories VAT REGISTRATION VAT for Semi-independent accomodation providers Reply To: VAT for Semi-independent accomodation providers

Trevor S

Thanks for your reply. Hopefully it will help if I explain the logic behind my questions. I was the in-house VAT advisor within local authorities with housing and social services functions for over 20 years, and never came across an arrangement like this!

Supplies covered by VAT exemption are detailed in Schedule 9 of the VAT Act 1994. The potentially relevant extracts are as follows. The word “land” here also includes “buildings”:

Item 1: The grant of any interest in or right over land or of any licence to occupy land, or, in relation to land in Scotland, any personal right to call for or be granted any such interest or right, other than:

(d) the provision in an hotel, inn, boarding house or similar establishment of sleeping accommodation or of accommodation in rooms which are provided in conjunction with sleeping accommodation or for the purpose of a supply of catering;

Note 9: “Similar establishment” includes premises in which there is provided furnished sleeping accommodation, whether with or without the provision of board or facilities for the preparation of food, which are used by or held out as being suitable for use by visitors or travellers.

So first I was trying to ensure that there were no other elements to the supply which would prevent it falling within item 1. Then I needed to be sure that it wouldn’t be excluded from exemption due to the exception in (d). The final issue was to ensure that your friend’s company actually did both “receive” and “make” supplies of the properties, rather than just acting as more of a letting agent.

In my opinion these appear to have all been met – assuming that the “other organisations” providing any care and support aren’t “related” to your friend’s company, and provides their services direct to the LA or young person, rather than via your friend’s company. The arrangement wouldn’t seem to be caught by the exception (d). And the fact that the landlords grant a tenancy to your friend’s company, which then grants Excluded Licence Agreements – often for different periods and with different terms and conditions (the “house rules”) to the individual young people, shows that the company is receiving and making supplies of the properties. Therefore I believe that the income from the LAs would not count towards the VAT registration threshold for the company.

As far as I know, there’s nothing in the forum rules that would prevent members offering paid advice “off-forum” – however I’ve always chosen not to. If I were to provide paid advice, I would want to be able to “back” it with the type of professional guarantees that you’d expect from an advisory firm – which isn’t practical for me to do for the occasional opinions I post on forums! However, other advisors on here may be prepared to offer a paid consultation – in which case the information and opinions here would provide useful background information. Another alternative might be for your friend to seek their accountant’s view on the opinions I’ve given. If they’re prepared for a small fee to write confirming they agree with the opinion, your friend has something to hold on file just in case HMRC ever did ask questions. Ultimately the key with VAT is to always be able to demonstrate that you have taken what HMRC refer to as “reasonable care” – and even seeking advice here would help with that.

Hope this helps – but if you or your friend have any further queries or doubts, please feel free to post them here.