HM Revenue & Customs have issued a Brief stating that they view the supply of a room and catering as both being taxable even if the catering is supplied by a different party to the one supplying the room.
HMRC point out that although this view has been part of public notice 709/3, Hotels and holiday accommodation, since October 2011, HMRC will not take action to alter any “incorrect” treatment before 22 January 2013.
If you are operating a hotel, inn, boarding house, or similar establishment and use third party caterers this is an important issue if you are currently treating the room hire as exempt. Venue suppliers will also need to consider the commercial impact where the hirer cannot recover the additional VAT charged.