VAT on Long Stay Guests

  • 11 Dec 2015
  • By Philip Holdsworth

Following this weekends awful flooding throughout the county, those in the tourism industry may find that a number of guests are staying for longer than one month (28 days) whilst their homes are recovering from flooding. If you are VAT registered, then you can apply exempt VAT to the continuous stay past the 28.

The way this works is that the first 28 days of consecutive stay are still a standard rate of supply and so will attract the normal output VAT to the guest. However, the rule allows the charge for sleeping accommodation to be relieved from VAT when a guest stays for over 28 consecutive days. You can still recover all the input VAT in respect of providing this accommodation. The rule only applies from the 29th day of the stay and the previous 28 days will still incur output VAT.

For the reduced VAT for long-stay guests to apply, the guests stay must be continuous. This means that:

  • If a guest stays for three weeks every month, you must charge the customer VAT in full
  • If a guest stays for five weeks, leaves for a week and returns to stay for a further five weeks, the reduced VAT only applies to the fifth week on each separate occasion as the guests stay is not continuous.
  • However, if the guest is a long term resident and leaves for an occasional holiday or weekend away from the place of stay, this would not break the rule and VAT should only be charged on the first 28 days.
  • It may be as well to note that the guest does not have to return to the same room/caravan

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