Realreed Limited v The Commissioners for HMRC
Decision date: 15 December 2023
Neutral citation: [2023] UKFTT 1042 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This case concerned whether lettings of serviced apartments at Chelsea Cloisters by Realreed were VAT-exempt grants of rights over land or excluded from exemption as "the provision in an hotel, inn, boarding house or similar establishment of sleeping accommodation" (Item 1(d), Sch 9 VATA). The Tribunal held Chelsea Cloisters was similar to a hotel, so the lettings were excluded from the land exemption, applied para.9 Schedule 6 to limit Realreed's taxable value for long stays to 20% of its own supply, and dismissed Realreed's penalty appeal for careless inaccuracy.
Ratio decidendi
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AI confidence in this ratio decidendi summary: medium
An establishment is "similar to a hotel" for Item 1(d) where it provides short-term furnished sleeping accommodation together with ancillary services and is used or held out as suitable for visitors or travellers; accordingly lettings of such accommodation are excluded from the land exemption. Where para.9 Schedule 6 applies and accommodation and ancillary services are supplied by separate legal persons, the provision operates on the taxable supplier's own supply and can reduce the taxable value of that supplier's long-stay provision to a minimum of 20% of its own supply value.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The length or form of contractual occupation (e.g. AST versus GRF) does not by itself determine Item 1(d)'s application; only very long fixed initial terms without break rights might place a supply outside the concept of "sleeping accommodation" for Item 1(d). Also, although VAT treatment treats separate suppliers' services separately, a commercial reorganisation to create a single supplier could avoid perceived unfairness under para.9.