Supplies of such accommodation are standard-rated, regardless of who is providing the catering
HMRC has issued Revenue & Customs Brief 02/13 concerning the VAT treatment of rooms provided in hotels, etc for the purpose of supplies of catering. HMRC’s view is that the provision of accommodation in a hotel, inn, boarding house or similar establishment for the purpose of catering is standard-rated, regardless of who is providing the catering.
This brief has been issued following the publication of an updated Notice 709/3 Hotels and holiday accommodation. When the previous version of the guidance was written, HMRC's view was that where both the room and the catering were supplied by the hotel or similar establishment, the whole supply (including the provision of the room) would be standard-rated. However, where the catering was supplied by a different person, the supply of only the room by the hotel would be exempt (unless the supplier had opted to tax). HMRC subsequently changed its view on this second point but did not update its guidance to reflect this. Its view now is that the provision of accommodation in a hotel, inn, boarding house or similar establishment for the purpose of catering is standard-rated, regardless of who is providing the catering.
HMRC says that where businesses have treated supplies as exempt from VAT in the past, no assessments will be issued or action taken to correct the treatment of such supplies. All supplies should, however, be treated consistently with HMRC's revised interpretation with effect from 22 January 2013 (the date Revenue and Customs Brief 02/13 was issued).