Hotel Keeping
08/12/1994
Query
whether a hostel which offers budget accomodation to tourists is a building or structure in use for the purposes of the trade of hotel-keeping.
Decision
Section 268(1)(d) of the Taxes Consolidation Act, 1997 provides that an industrial building or structure means a building or structure in use for the purposes of. inter alia, the trade of hotel-keeping. Since hotel-keeping is not defined in the Act it must be construed in the ordinary sense of the word. Revenue's view is that the following factors must be considered when deciding whether a building is in use for the trade of hotel-keeping: 1. the establishment must provide sleeping accommodation, food and drink. The provision of alcoholic drink is not a requirement. 2. there is an obligation on the hotel-keeper to receive all lawful travellers. Travellers include all comers to the hotel whether they avail of sleeping accommodation or not. The hotel-keeper must therefore provide food for all reasonable times, such as breakfast lunch and evening meals, as a matter of course, to the public at large. A hotel may be contrasted with a guest house in which control may be retained over the choice of lodgers to be admitted, and in which there is no obligation to the pub;ic generally. 3. The hotel-keeper is liable for the property of the persons in his establishment without them having to prove negligence. 4. the term hotel-keeping implies a certain standard of facilities and services e.g. reception desk, adequately trained kitchen staff and hall porter. A minimum number of rooms os required in ordeer to provide facilities and services intrinsic to hotel-keeping. It is a question of fact whether or not such facilities are provided at any given number of guest bedrooms. Generally, a building does not have to be registered with Bord Failte in order for it to be regarded as a building in use for the trade of hotel-keeping for capital allowances purposes. The fact that it is unlawful for a proproetor to describe or hold out a premises as a hotel is not, by any means, conclusive, as to the nature of the trade being carried out. Only where accelerated capital allowances are being claimed must a hotel be registered with Bord Failte. The issue has been the subject of an appeal in the Circuit Court. Based on the particular circumstance of the case a hostael offering budget accomodation to tourists was regarded as a building in use for the purposes of the trade of hotel-keeping. Revenue have appealed the decision to the High Court.
Income Tax
Section 268, Taxes Consolidation Act, 1997
Origin: RLS Division
File ref:GD96047B