VAT, Accommodation BID Charge and BID Levy

All BID levy demand notices will continue to be issued to Levy Payers by Liverpool City Council free of VAT.

HMRC guidance note states :

‘Collection of the BID levy by the local authority falls outside the scope of VAT, being a statutory levy which is not different to the collection of Business or Non-Domestic Rates. Where a BIDcompany contracts with a local authority to deliver BID services, that company is seen to be making supplies to the local authority.

This clarifies that levy demand notices are out of scope of VAT.

Accommodation BID charge and VAT

Having ascertained that the demand notice for BID levy will continue to be issued to Levy Payers as normal, the question arises – If Accommodation BID levy payers choose to offset their BID levy demand notices, bypassing the cost of £2 per room per night to their guests, is VAT applicable to this element of the guest bill?

Currently, there is no guidance from HMRC which rules on this point.

National Context

The national picture on Tourism Levy can be accessed here.

From this document you will note that Tourism Levy is dealt with differently in the nations with devolved government ie Scotland and Wales. In England, there is currently no legislation to allow a local Tourist Tax and although this is being mooted by some local authorities, it may be some time away before any such tax is implemented.

In Scotland, the ICAS has provided the following guidance for its membershere.

In England, only Manchester has an Accommodation BID that utilises a visitor charge method of levy calculation. Manchester advises adding VAT ‘where applicable’. Hotel’s in Manchester are making their own decisions based on how they collect the levy on guests at their property.

VAT Communications for hotel guests

The Liverpool Accommodation BID Charge is a fee of £2 per room/ per night. This may also include VAT. *Hotel insert how guest charged

The city-wide fee has been introduced to all bookings from June 2025 as part of an initiative led by the city’s larger hotel and serviced apartment providers to create new events and activities and improve the experience for overnight guests visiting the city.

It will specifically support bringing major events to the city, including cultural, sporting and business events. It will also support marketing campaigns and city dressing to enhance the visitor experience. It will also offer support to the visitor economy sector in terms of skills accessibility, and sustainability initiatives.

Professional advice on VAT.

The Accommodation BID and Liverpool BID Company cannot offer legal financial guidance to hotels as there is currently none provided by HMRC in terms of VAT. However, having sought professional advice on this matter, the opinion is that VAT should be charged. Liverpool BID Company must caveat this to advise hotels cannot rely on this advice and should always seek their own guidance.