{"id":21883,"date":"2022-03-17T14:13:20","date_gmt":"2022-03-17T14:13:20","guid":{"rendered":"https:\/\/smh.group\/?p=21883"},"modified":"2023-02-15T13:43:00","modified_gmt":"2023-02-15T13:43:00","slug":"taxpayer-victory-leads-to-room-hire-vat-exemption","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/taxpayer-victory-leads-to-room-hire-vat-exemption\/","title":{"rendered":"Taxpayer victory leads to room hire VAT exemption"},"content":{"rendered":"

A recent First-Tier Tribunal (FTT) decision in the taxpayer\u2019s favour has helped clarify that room rental is VAT exempt, but standard rating can apply if additional services are also supplied, such as a hairdresser renting chair spaces.<\/strong><\/p>\n

The FTT case involved hair and beauty business, Errol Willy Salons, hiring out two spare rooms to self-employed beauticians. Exempt VAT treatment suited the beauticians who were not VAT-registered.<\/p>\n

HMRC argument <\/strong><\/h2>\n

HMRC contended that a standard rated package of services was being provided rather than just the two rooms. Along with the use of rooms, the self-employed beauticians had access to the staff toilets and rest area, occasional use of the services of a receptionist, and were provided with light and heat. They also benefited from advertising.<\/p>\n

HMRC argued the facts were similar to the Byrom<\/em> case \u2013 which had gone in their favour \u2013 where rooms hired to self-employed masseuses came with a bundle of other services including access to a kitchen, showers, a washing machine, linen and towels, security and a reception.<\/p>\n

A victory for HMRC could have impacted on any business letting out a spare room. However, although HMRC\u2019s ambition to narrow the VAT room rental exemption has been checked, they may now resort to legislative change.<\/p>\n

The decision<\/strong><\/h2>\n

The FTT disagreed that the Byrom<\/em> case was comparable because the beauticians in the Errol Willy Salons <\/em>case were only provided with what were essentially bare rooms. The masseuses in the Byrom<\/em> case, in contrast, had the use of a package of services, one of which was the provision of a room.<\/p>\n