Tag: Hotel

Can HMRC dictate where I stay on Business?

Business Woman talking on the smartphone in a room of the hotel

Assuming your employer or supplier or customer aren’t reimbursing your costs….

If you’ve got to make journeys for business purposes you can deduct your traveling expenses from your taxable income – so you’ll pay less tax. (If they pay and its ‘wholly and exclusively’ for business they get the tax deduction and its not a benefit in kind)

In addition, there is no restriction on the standard of travel and accommodation, provided the main purpose of the trip is that of business, you can travel first class and stay at the best hotels.

But what if the trip is partly business and partly pleasure, in this case you will need to apportion the costs and only claim for the business element.

The problem comes if the hotel bills somethings outside of the normal package for example a round of golf, this could well become a taxable benefit.

steve@bicknells.net

 

Interesting Tax Facts – VAT and Hotels

HotelTax is made up of bizarre and complicated rules and for accountants that’s a good thing, keeps us in work, but why tax can’t be simplified is beyond me, its a crazy tax world out there.

Here are some VAT examples for Hotels – HMRC Reference:Notice 709/3 (October 2011) :

The Long Stay Rule

If a guest stays in your establishment for a continuous period of more than 28 days, then from the 29th day of the stay you should charge VAT only on that part of the payment that is not for accommodation.

A guest’s stay must be continuous to qualify for the reduced value rule. For example, if a guest stays for three weeks every month, you must always charge them VAT in full. If another guest stays for five weeks, leaves for a week, and returns to stay for five more weeks, the reduced value rule applies only to the fifth week of each separate stay.

However, a guest’s departure is not seen to end their stay provided the guest:

  • is a long-term resident and leaves for an occasional weekend or holiday,
  • is a student who leaves during the vacation but returns to the same accommodation for the following term, or
  • pays a retaining fee

In these cases the time away is ignored and you only have to charge VAT in full for the first 28 days of the overall stay.

It does not matter whether the guest returns to the same room or not.

VAT Exempt Meeting Rooms and Refreshments

Hiring a room for a meeting, or letting of shops and display cases are generally exempt, but you may choose to standard-rate them by opting to tax, see Notice 742A Opting to tax land and buildings.

If you make an exempt supply such as providing a room for a meeting or a conference and you provide minimal refreshments such as tea, coffee and biscuits, the room and the incidental catering will be treated as a single exempt supply. But, if you serve substantial refreshments such as a meal or buffet, the catering should be treated as a separate supply and you must account for VAT based on the normal charges you would make for such catering.

VAT on Deposits

Most deposits serve as advanced payments, and you must account for VAT in the return period in which you receive the payment. If you have to refund a deposit, you can reclaim any VAT you have accounted for in your next return.

Reclaim Overpaid VAT

If you have overpaid VAT you can now go back up to 4 years and reclaim it.

steve@bicknells.net