Update on reduction of VAT rate for the canal boat hire industry

Wednesday 15th July, 2020

Yesterday evening British Marine had clarification from HMRC that the temporary reduced VAT reduction does NOT apply to boat hire holidays. In VAT regulations boating holidays are specifically excluded from holiday accommodation.

Obviously this is disappointing news for us and our industry and believe it leaves us at a competitive disadvantage to other UK based holidays. We have challenged the decision by writing to HMRC, the Chancellor of the Exchequer and the Tourism Minister.

Statement from British Marine

On the 8 July 2020, the Chancellor of the Exchequer provided an update on the measures HM Treasury would take to support businesses following the COVID-19 pandemic.

Included in his announcement was a VAT cut to 5% for the tourism and hospitality sectors for a 6 month period (15 July 2020 to 12 January 2021).

In a communication on 14 July, HMRC confirmed to British Marine that the reduction of VAT to 5% for holiday accommodation does not apply to those businesses hiring recreational craft with overnight accommodation, nor does it apply to mooring providers for any vessels.  The reduction in VAT to 5% would only apply to those providing holiday accommodation on houseboats.

HMRC have provided further clarification and definitions of “Houseboats” in their guidance notice “Hotels and holiday accommodation (VAT Notice 709/3)”

For those wishing to seek clarification on this definitive position from HMRC, British Marine would recommend contacting the HMRC National Call Centre on 0300 200 3700 and quoting the call reference number “DBS-10912” for confirmation of this position.

British Marine is disappointed by this decision and believes that by not including our industry within the scope of holiday accommodation for VAT purposes, HMRC is supporting anticompetitive activity by favouring other industries in the tourism sector. British Marine will therefore now be challenging HMRC’s position to ensure there is a level playing field for all holiday accommodation providers.