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05 January 2016
Problems in ascertaining the amount on which VAT should be charged.
I have a client who runs an upmarket hotel in the Lake District and he has just had a VAT review by HMRC. The officer has identified two possible errors that may have been made.
- First the hotel donated a “luxury weekend break” to a charity which auctioned it at its annual fundraising dinner. My client told the charity that it would split the proceeds raised in the auction on a 50:50 basis. Output tax was declared on the 50% kept by my client but the HMRC officer said that it should be accounted for on the full price and that the other 50% represented a payment by the hotel to the charity. Is that correct? The hotel had no dealings with the auction winner at the dinner.
- Second by applying the wrong room rate the hotel has overcharged a...
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