Licensees offering rooms urged to get up to speed on VAT changes

Licensees who provide accommodation for staff or have letting rooms will need to make sure they are up-to-date with the latest changes in VAT.

HM Revenue and Customs (HMRC) has issued a revised notice which says that staff accommodation income now includes VAT.

Pub trade accountant David Jones of DRJ Accountants said: “If a staff member pays you for their accommodation (or food and drink), the monies received will now be treated as including VAT and you must account for it on your VAT return. 

“For example, if you receive £100 per week from your manager living at the pub, you will be almost £17 per week worse off (unless you increase his rent to £120 per week).”

Letting rooms​

For letting rooms income, if a licensee has a paying guest has who has stayed for more than 28 consecutive days, from the 29th day onwards, Jones said it is no longer necessary to pay VAT on this income.

However, he said that VAT is still due on meals and drinks.

“There could be issues with TV licensing and council tax, so you should seek advice,” explained Jones.

Cancellation​

In terms of letting room cancellation charges, Jones said that VAT is not due “because it is treated as compensation”.

Jones added: “But this does not apply to guaranteed rooms which you are obliged to hold for a customer for an agreed period.  Any fee charged where the room remains available to the customer is consideration for a supply and is subject to VAT.”