British Marine has secured a welcome win for the holiday hire boat sector as HMRC reverse their decision on the applicability of the VAT rate reduction. HMRC have now confirmed that the temporary reduction to 5% for holiday accommodation does apply to those hiring out boats (inland and coastal) which are to be used for overnight accommodation.
On 14 July, confirmation was received from HMRC that the reduction of VAT to 5% for holiday accommodation would not apply to those businesses hiring recreational craft with overnight accommodation. British Marine immediately mobilised to challenge this position taken by HMRC with the belief that by not including the leisure marine industry within the scope of holiday accommodation for VAT purposes, HMRC would be supporting anti-competitive activity by favouring other industries in the tourism sector.
An emergency meeting hosted by British Marine along with representatives of the trade formed the basis for lobbying HMRC to ensure a level playing field for all holiday accommodation providers.
HMRC have now officially published official confirmation in VAT Notice 709/3, specifically under section 5.1, which says:
“The hire of a boat will qualify for the temporary reduced rate provided that it is suitable for holiday accommodation and is being held out in this way. Boats being hired for a day to enjoy the activity of sailing for example will not qualify for the temporary reduced rate as they are not being used for holiday accommodation.”
British Marine and HMRC continue to work together to develop further leisure marine industry guidance to ensure that other parts of our industry, such as mooring providers, are not treated unfairly and are aligned with other sectors, such as caravan parks.