In a move that does not seem to have been widely advertised, the agreement between the Brewers’ Society and HMRC was withdrawn with effect from 1 June 2018.
Under this agreement where a public house included a residential element, often a self-contained flat for a manager, the rents and any disposal of the building were deemed to be split 90% for the commercial element and 10% for the residential element. This is important if the letting or disposal of the commercial element of the building is subject to VAT, for instance where the building has been opted to tax.
From 1 June 2018 owners of public houses must review their rental calculations and any disposal of these properties to ensure that any split between the commercial (possibly standard rated) and residential (exempt) elements of the rent or disposal proceeds is fair and reasonable. It is no longer possible to assume that the 90/10 split will be acceptable.