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Mr & Mrs C Ward v HMRC

In Mr & Mrs C Ward v HMRC (TC02179 – 22 August) a married couple operated a motel which provided bed-and-breakfast accommodation. They also owned an adjacent building containing several self-catering studio flats some of which they leased to the local authority. They accounted for VAT on the receipts from bed-and-breakfast accommodation but did not account for VAT on the income from the studio flats. HMRC issued a ruling that the studio flats were excluded from exemption under VATA 1994 Sch 9 Group 1 Item 1(d). The tribunal dismissed the couple’s appeal holding that ‘the premises as a whole should be classified as a hotel or similar premises and therefore the studios were subject to VAT’.

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Why it matters: The First-tier Tribunal upheld HMRC’s view that the studio flats were part of a ‘similar establishment’ to a hotel or boarding house ...

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