New queries, issue 4570

Holiday times

VAT implications of B&B owners letting rooms as self-contained accommodation.

Our clients run a successful bed and breakfast business in a large house on the south coast. Turnover is maintained below the VAT registration threshold although this is only achieved by turning away bookings towards the end of the summer season.

Part of the house has been occupied by the clients as their main private residence. Recently they have been successful in removing the planning restriction which stipulated that this annex could only be used as owner’s accommodation for the bed and breakfast hotel. Because their family has now grown up they no longer need all the space this accommodation provides.

They intend to convert the accommodation previously used as their main residence into a self-contained property and will let this as a self-catering holiday cottage on a weekly basis throughout the summer season.