In Blue Chip Hotels v HMRC [2017] UKUT 204 (19 May 2017), the UT found that the supply of a room approved for marriage ceremonies was not an exempt supply of land (VATA 1994 Sch 9).
Blue Chip owns and operates a large hotel in Newquay, Cornwall. The hotel has a room, the Tamarisk Room, which is approved as premises in which civil marriage ceremonies may take place. Other parts of the hotel are available for wedding receptions and some customers hold both the ceremony and the reception in the hotel. In all cases in which it was used, Blue Chip treated the hire of the Tamarisk Room for civil wedding ceremonies as an exempt supply of land.
The FTT had held that the supply of the hire of the Tamarisk Room was a separate supply for VAT purposes, even when it was sold as a part of a ‘wedding package’ which included the wedding ceremony and other services, such catering and the hire of other rooms. That conclusion was not appealed. The issue under appeal was whether the FTT had been right to hold that the separate supply of the Tamarisk Room was not an exempt supply of land.
The UT observed that the customer could not assert exclusivity with respect to members of the public exercising their rights of access to the Tamarisk Room, but that this fact alone did not prevent the occupation from having the necessary quality of exclusivity to amount to a letting of immovable property under the Principal VAT Directive Art 135(1)(l). The issue was therefore whether, having regard to what was provided by Blue Chip, the supply amounted to more than a ‘relatively passive activity linked solely to the passage of time and not generating any significant added value’ (Temco (Case C-284/03)).
The UT observed that a supply cannot be characterised as a leasing or letting of immovable property within the scope of the exemption if the landlord does more than simply make property available to the tenant for a period, but actively exploits the property to add significant value to the supply. It found that the service provided by Blue Chip was not simply making a room available to the customers: it was the provision of an approved room for a marriage ceremony. That meant that the Tamarisk Room had to be a ‘seemly and dignified’ venue for such proceedings; and Blue Chip had to meet the obligations imposed on it by the Approved Premises Regulations, such as making a responsible person available and supervising the use of the room.
Why it matters: Unlike the FTT, the UT would not describe the right of the customer who hired the Tamarisk Room to be one of participation in a wider event organised by the supplier, similar to the right acquired in International Antiques and Collectors Fairs [2015] UKFTT 354. The supply by Blue Chip was standard rated because it involved the active exploitation of the room by adding significant value to it.
In Blue Chip Hotels v HMRC [2017] UKUT 204 (19 May 2017), the UT found that the supply of a room approved for marriage ceremonies was not an exempt supply of land (VATA 1994 Sch 9).
Blue Chip owns and operates a large hotel in Newquay, Cornwall. The hotel has a room, the Tamarisk Room, which is approved as premises in which civil marriage ceremonies may take place. Other parts of the hotel are available for wedding receptions and some customers hold both the ceremony and the reception in the hotel. In all cases in which it was used, Blue Chip treated the hire of the Tamarisk Room for civil wedding ceremonies as an exempt supply of land.
The FTT had held that the supply of the hire of the Tamarisk Room was a separate supply for VAT purposes, even when it was sold as a part of a ‘wedding package’ which included the wedding ceremony and other services, such catering and the hire of other rooms. That conclusion was not appealed. The issue under appeal was whether the FTT had been right to hold that the separate supply of the Tamarisk Room was not an exempt supply of land.
The UT observed that the customer could not assert exclusivity with respect to members of the public exercising their rights of access to the Tamarisk Room, but that this fact alone did not prevent the occupation from having the necessary quality of exclusivity to amount to a letting of immovable property under the Principal VAT Directive Art 135(1)(l). The issue was therefore whether, having regard to what was provided by Blue Chip, the supply amounted to more than a ‘relatively passive activity linked solely to the passage of time and not generating any significant added value’ (Temco (Case C-284/03)).
The UT observed that a supply cannot be characterised as a leasing or letting of immovable property within the scope of the exemption if the landlord does more than simply make property available to the tenant for a period, but actively exploits the property to add significant value to the supply. It found that the service provided by Blue Chip was not simply making a room available to the customers: it was the provision of an approved room for a marriage ceremony. That meant that the Tamarisk Room had to be a ‘seemly and dignified’ venue for such proceedings; and Blue Chip had to meet the obligations imposed on it by the Approved Premises Regulations, such as making a responsible person available and supervising the use of the room.
Why it matters: Unlike the FTT, the UT would not describe the right of the customer who hired the Tamarisk Room to be one of participation in a wider event organised by the supplier, similar to the right acquired in International Antiques and Collectors Fairs [2015] UKFTT 354. The supply by Blue Chip was standard rated because it involved the active exploitation of the room by adding significant value to it.
