VAT on hotel stays - who pays?

DoctorStrange

Not quite sure where else to post so hoping someone here mighty know a little about my issue.

I recently had to stay in a hotel for a few weeks, which was booked through hotels.com.

At check out, I was told that the hotel couldn't issue a VAT invoice as they contracted with hotels.com and I should contact them instead. However, despite my receipt having entries for "taxes and fees", hotels.com claim they didn't charge me VAT so can't issue a VAT receipt. They also claim they can't tell me any more about these "taxes and fees" or what they are!

So what's going on here - was any VAT collected and, if so, by whom? I can't see how services provided by a UK company to a UK company, albeit via a US broker, can be exempt from VAT but that seems to be what has happened.

Thanks

antrobus

If you would like a VAT receipt or tax invoice of your hotel or vacation rental expenses for either leisure or business travel, you must select Pay Later during booking. Once you've submitted payment at check-out, ask the front desk or property manager for a tax invoice.

http://hotelsen.custhelp.com/app/answers/detail/a_id/20279/~/get-a-receipt-for-your-hotel-or-vacation-rental-booking

DoctorStrange

Yeah, I didn't see that before booking.

However, I'm confused why it makes a difference? Are we saying that if I pay hotel directly that VAT applies but it didn't if I pay via hotels.com?

00ec25

as you fully appreciate, hotels.com are acting as an agent and pass over to the hotel any money you pay. That collected is treated as a "disbursement" upon which no VAT is charged by hotel.com because it is not them who have provided the service upon which VAT is charged. (Disbursement is the technical term for money paid to an intermediary agent upon which there is indeed no VAT charged by the agent because there is no taxable service provided by the agent, they simply receive and pass on money. That is not, by definition, a "taxable supply" for VAT)

the service is provided by the hotel, and it is the hotel who must account for the VAT charged on it. Obviously everyone knows that VAT will be charged at the end of the day, hence it is included in the headline rate displayed by hotels.com, so that they collect the full amount from you, but your VAT inspector would not accept the booking/payment confirmation paperwork from hotels.com if you try to claim vat with only that as support.

I'm afraid your hotel receptionist was very wrong to say you had to get a VAT receipt from hotels.com. The vendor is the hotel you stayed at, and it is they who must issue the VAT receipt since the VAT is upon the whole sum paid by you to the hotel. It is one of the great downsides of using these websites when you have a VAT registered business as failing to claim the VAT because you can't get a valid VAT receipt nearly always wipes out any "saving" you've made by comparing the market.

(Obviously the hotel has to pay a "fee" to hotels.com, but that is a transaction between those two entities, not you, so you are not party to the vat implications of that fee.)

prowla

Whoever you pay should give you the VAT receipt.

00ec25

prowla wrote: »

Whoever you pay should give you the VAT receipt.

too simple, not how it always works

neilmcl

This might explain what's going on and why you won't necessarily get or require a VAT invoice - https://www.taxation.co.uk/articles/2010-05-27-20466-hmrc-make-agreement-hotel-billback

DoctorStrange

TODAY 7:17 AM
00ec25

the service is provided by the hotel, and it is the hotel who must account for the VAT charged on it. Obviously everyone knows that VAT will be charged at the end of the day, hence it is included in the headline rate displayed by hotels.com, so that they collect the full amount from you, but your VAT inspector would not accept the booking/payment confirmation paperwork from hotels.com if you try to claim vat with only that as support.

Yeah, this is why I thought it'd be easy to get a VAT invoice from the hotel. I'm surprised at their stance here to be honest.

I'm afraid your hotel receptionist was very wrong to say you had to get a VAT receipt from hotels.com. The vendor is the hotel you stayed at, and it is they who must issue the VAT receipt since the VAT is upon the whole sum paid by you to the hotel. It is one of the great downsides of using these websites when you have a VAT registered business as failing to claim the VAT because you can't get a valid VAT receipt nearly always wipes out any "saving" you've made by comparing the market.

Sorry, I'm unclear on this bit. If the hotel receptionist was wrong to state I can't get a VAT invoice, presumably I can still get one? And if I can, is there a still a downside to using these websites?

neilmcl

DoctorStrange wrote: »

Yeah, this is why I thought it'd be easy to get a VAT invoice from the hotel. I'm surprised at their stance here to be honest.

If you read the link I posted if I'm understanding it correctly, if the booking agent is acting in a "disclosed capacity" then you wont get the VAT invoice but your payment advice/statement will be sufficient as proof of your input tax reclaim.

DoctorStrange

Thanks - we posted at the same time so I didn't see your link before

However, I'm still unsure as the link says:

"The hotel booking agent will send the customer a payment request/statement of the expenditure incurred by the hotel booking agent on its behalf, separately identifying the value of its supplies, VAT, etc."

All the receipt from the agent says is "taxes and fees" i.e. VAT is broken down anywhere so I don't think this will be sufficient?