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No meal at the inn?
In 1985, a sole trader client incurred £220,000 on the construction of a hotel in a local market town. Hotel allowances were claimed and there is currently a written down value carried forward of £62,000. In recent years, an explosion in the number of eating establishments nearby has meant that guests have chosen to eat out, rather than being served a traditional evening meal at the hotel. Some customers have even arranged for the delivery of pizzas to be eaten at the hotel.
No meal at the inn?
In 1985, a sole trader client incurred £220,000 on the construction of a hotel in a local market town. Hotel allowances were claimed and there is currently a written down value carried forward of £62,000. In recent years, an explosion in the number of eating establishments nearby has meant that guests have chosen to eat out, rather than being served a traditional evening meal at the hotel. Some customers have even arranged for the delivery of pizzas to be eaten at the hotel.
During an enquiry, the Revenue is claiming that a balancing charge arises as evening meals have not been provided since March 2000. In all other respects the hotel allowance is valid. This Inspector's argument is based on a change in the hotel facilities as shown in a local tourist board brochure when the evening meal symbol was removed. If we concede to this, then additional tax of over £60,000 will be due.
Our client maintains that evening meals were provided until March 2002 and restarted in September 2003, coinciding with the Revenue raising the matter. As evidence in offering evening meals in that period, an external sign showed the provision of evening meals alongside the name of the hotel; a notice in the reception area offered evening meals; a sheet describing the facilities available, including meals, was left in each room; staff, facilities and ingredients to cook evening meals were available as breakfast was provided as well; and there is a very small number of invoices raised for meals.
Do readers have any experience or contribution which could assist our argument?
(Query T16,506)
