Glamping Boom Brings VAT Challenges for Rural Entrepreneurs


Glamping Grows in Popularity

Rural landowners and farmers are increasingly turning to the lucrative trend of glamping to supplement their income. This modern twist on camping has become a staple of the UK’s tourism sector, offering a unique outdoor experience with a touch of luxury. As traditional agricultural practices are supplemented with innovative tourism ventures, glamping is carving out a niche in the countryside economy.

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VAT Complications Arise

Despite the allure of diversification, the accountancy firm Saffrey LLP warns of the “VAT complexities” that come with establishing a glamping enterprise. They highlight that while glamping services are subject to the standard rate of VAT, there are intricacies in the tax system that landowners must navigate. With the threshold for VAT registration set to rise to £90,000 from April 2024, those with a taxable turnover exceeding this limit will need to register for VAT.

Understanding VAT Obligations

Nick Hart, VAT director at Saffrey LLP, emphasizes the importance of maximizing VAT recovery due to the substantial initial investment required for setting up glamping facilities. Hart advises that entities already registered for VAT can charge VAT from their first booking and reclaim VAT on associated purchases, simplifying the process. However, for new ventures, understanding and managing VAT obligations is critical to financial success.

Structuring Your Glamping Business

It is common for glamping operations to be conducted through a separate business entity, rather than directly by the landowner. This strategy can offer asset protection and manage risks associated with public access to private land. However, Saffrey LLP advises that the VAT implications of such arrangements must be carefully considered, especially when it comes to the purchase of glamping equipment and the right to operate on the land.

Purchasing and VAT Recovery

The firm stresses the necessity of purchasing glamping tents or pods through the operating company, not the landowner, to avoid VAT recovery complications. Seeking advice during the business planning phase is strongly recommended to establish the most effective operating structure and address VAT considerations before incurring significant costs.

Agent-Processed Bookings and VAT

Similar to traditional camping and holiday cottages, glamping bookings are often handled by agents. For VAT purposes, the gross income from these bookings is subject to VAT, not the net amount after agent fees. Hart points out that the intricacies of VAT accounting, such as the income value and timing of VAT liability, are often overlooked by newcomers to the glamping sector, highlighting the need for specialized advice.

In a nutshell, while glamping offers a promising avenue for rural business expansion, it is accompanied by a complex tax landscape that requires careful navigation. Expert guidance is recommended to ensure compliance and optimize the financial potential of glamping ventures.

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