Acrylux Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 01 September 2009 |
| Neutral Citation | [2009] UKFTT 223 (TC) |
| Date | 01 September 2009 |
| Court | First Tier Tribunal (Tax Chamber) |
[2010] TC 00173
[2009] UKFTT 223 (TC)
Tribunal Judge Malcolm Gammie CBE QC (Chairman); Tribunal Member Mrs Lynneth Salisbury
Andrew Fisher (Accountant) for the Appellant
David Manknell (Counsel) instructed by the Solicitor for HM Revenue and Customs, for the Respondents
Value added tax: exemptions - Value Added Tax Act 1994 schedule 9 group 1VATA 1994, Sch. 9 Grp. 1, items 1(d) and (e) - whether hire of property for weekend events a taxable supply of a "similar establishment" to an hotel - Alternatively a taxable supply of holiday accommodation - Whether an exempt supply - Appeal dismissed
Exemption - Land and property - Whether hire of property for weekend events is a taxable supply of a "similar establishment" to an hotel - Whether a taxable supply of holiday accommodation - Whether an exempt supply - The appellant acquired a property known as Huntsham Court with the intention of converting it into residential apartments - While awaiting planning permission, the appellant decided to make the property available for short-term letting - Standard charges were £6,250 for weekends and £8,000 for five-day lets - By far the largest use was for weddings, but the property was also let for conferences, parties, filming and group get-togethers - In all cases, the supply was of the use of the building with furnished sleeping accommodation - The commissioners became aware that no VAT was declared on the letting and issued an assessment in the sum of £75,455 together with a penalty of £8,732 - The commissioners submitted that it was beyond doubt that the property was a "similar establishment" to an hotel and contended that the supply was standard-rated under exception (d) to item 1 of the Value Added Tax Act 1994 schedule 9 group 1Value Added Tax Act 1994, Sch. 9, Grp. 1 - Alternatively, the commissioners submitted that the property was even more plainly holiday accommodation - Either way, they claimed, the supply was not exempt - The appellant argued that Huntsham Court was not a commercial property, but a 22-bedroom private dwelling which was neither an hotel nor a similar establishment - Neither was it holiday accommodation as its size made it entirely unsuitable for this purpose - The appellant submitted that the property was hired on an exclusive basis and it was entirely for the person hiring to determine how the property would be used - No catering or other services were provided and the hirer was not obliged to use any of the sleeping accommodation - Held, that the property was a similar establishment within exception (d) to item 1 of Grp. 1 - Had the tribunal not concluded that the supplies were of accommodation in an establishment similar to an hotel, inn or boarding house, it held that it would, in any event, have found that the supply would have been that of holiday accommodation within exception (e) to item 1 - Holiday accommodation was an obvious example of property hired in its entirety, fully equipped and on a self-catering basis, with the principal service being the cleaning between lets and the provision of clean linen and towels - Since the appellant had acted honestly in accordance with advice received from the commissioners, the misdeclaration penalty was discharged - Appeal against the tax assessment dismissed.
1. By a Notice of Appeal dated 16th March 2007 Acrylux Limited ("the Appellant") appealed against an assessment dated 28th December 2006 in the sum of £75,455.06, a misdeclaration penalty issued on 9th January 2007 in the sum of £8,732.00 and a decision on reconsideration dated 20th February 2007. These related to the letting of premises known as "Huntsham Court".
2. In addition to the documents provided by each party, we heard evidence from David Macbeth (the sole director of the Appellant) and Jacqueline Bratt (the Company Secretary). The Respondents put in evidence witness statements by two of their officers, Alan Miles and Leslie Bingham to which no objection was taken. Mr Miles was called to confirm one correction to a VAT audit report that he had prepared, where he had recorded that the Appellant's accountant had accepted that the disputed supplies were taxable. He should have recorded that the accountant considered them to be exempt supplies. That is the question we have to resolve.
3. Huntsham Court (the "Property") comprises a large house with 22 bedrooms and grounds. Under previous (unrelated) ownership the Property had been used as an hotel but this venture had proved unsuccessful given the remote location and lack of suitable local amenities and facilities. The Appellant had bought the Property intending to turn it into residential apartments but had been advised by English Heritage that it could take considerable time to get planning permission for conversion and in the meantime the Appellant needed to generate income from the Property to service its finance costs. The Appellant therefore embarked upon its current activity of "short-term letting" to generate some income from the Property.
4. The Appellant has a dedicated website for the Property and the introductory page describes the Property in the following terms-
Huntsham Court
Huntsham Court is a Historic Victorian gothic country house based near Bampton, Devon.
If you are looking for a Venue to hold a special event - Weddings, Wedding Reception, Birthday Party or Anniversary, Huntsham Court is the place to be, set in the heart of the countryside in beautiful rural Devon.
Feeling more adventurous? The House is a fantastic setting for a Murder Mystery/Going back in time in costumes or just a get together with a large group of friends
With exclusive self catering hire, the possibilities are endless!!!
5. The introductory page is also used to indicate future available weekend dates. There then follow photographs of the exterior of the Property and of its rooms, which are described in the following terms-
We have 22 bedrooms ranging from twins to doubles to family rooms, with extra room for perhaps the larger family.
A large Great Hall for wedding ceremonies, discos etc with our own monarch looking down on you.
Drawing room and adjoining library for wedding receptions seating 100/120 guests. For pictures of examples showing how the halls are decorated see the Event Setups page.
Dining Room for formal dinner parties or buffets.
Bar and lounge for all your spiritual needs!
Butlers pantry for general tea, coffee, cakes, childrens meals, etc.
Large Kitchen for your use or approved caterers. Well equipped with 10 burner gas oven.
Outside Tennis courts, football area with goals and croquet lawn for your use while at the house.
6. There is a separate link to a page that describes the bedrooms (each of which is named after a composer) and provides a floor plan of the Property. There is also extra accommodation available under separate agreement on the third floor of the Property (known as "The Russian Suite", where the bedrooms are named after Russian composers. Evidently this is not usually let (and is kept locked) due to its defects but can be made available on payment of an additional fee to avoid losing custom. The pictures show that the Property is fully furnished and equipped including, for example, bed linen.
7. The events setup page of the website indicates that the Property can be used as a venue for different types of events, for example-
Weddings
Wedding Breakfast
Wedding Venues
Birthday Parties
Christmas Parties
New Years Eve Parties
Anniversaries
Group Get-togethers
Murder Mysteries - Themes
The Property has also been used for filming and photo shoots. By far the largest use of the Property, however, is for weddings and the webpage provides pictures of various rooms set up either for a wedding ceremony or for the wedding breakfast/reception. Mr Macbeth did not disagree with the description that appeared in the report prepared by the Respondents' officer after his visit to the Property in July 2006 that-
Hirers use the property as a venue for wedding reception celebrations, conferences and parties where guests/delegates can then stay overnight. In all cases the supply is the use of the house with furnished sleeping accommodation.
8. Two other pages - Activities and Useful Services - describe the variety of activities that can be found close to the Property. The activities include adventure, airsports, fishing, shooting, golf, etc. The services include bakers, butchers and hog roasts, caterers, entertainment, florists, hairdressers, massage, photography etc.
9. The standard charges for the Property are described as follows-
Rates up to Dec 2008:
£6,250 for Weekends
(up to three night stay)
Easter, Christmas and New Year £8,000 for up to 5 days
Private Self Catering Hire of Venue to include:
Grand Hall
Library
Drawing Room
Dining Room
Bar + Ice Machine
22 Bedrooms Ensuite
(of which 3 are two-bedroom family rooms)
10. No formal legal document is usually drawn up by solicitors in relation to each hire but the following are stated to be the terms and conditions upon which the Property can be hired-
1. Exclusive hire of house is £6,250 (2008) self catering (2 nights, 3rd night free of charge) based on 22 bedrooms (sleeping up to 44 people), plus £500 returnable deposit. Price includes bed linen, towels, hot water, central heating, crockery and cutlery for up to 44 people. Up to 6 extra single beds available at £25 per bed.
Booking Fee = £1,000 to secure venue, then 2 weeks prior to date £5,250 plus £500 returnable deposit (if no extras incurred).
The £500 returnable deposit is refunded within 2 weeks providing there are no mishaps, thus the total amount is £6,250.
2. Large parties:- matching cutlery, crockery, tables, chairs and glasses can be hired at £7.00 per head with approved caterers only. Tablecloths are £7.00 each and napkins 75p each. An extra £150 is charged for large parties of 60 - 120 people in order to cover extra wear and tear, extra £250 for...
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