HM Revenue and Customs Brief 05/12
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Issued 27 February 2012
Purpose of this Brief
The purpose of this Brief is to introduce new guidance on the
VAT liability of caravan pitch rentals, which reflects minor amendments
effective from 1 March 2012.
This Brief is for caravan site owners.
Caravan site owners who currently supply exempt pitches in
the circumstances described below (see 'Who will be affected…..?')
should check their VAT liability under the new guidance.
This Brief introduces new guidance on the VAT liability of
caravan pitch rentals. This new guidance reflects minor amendments that
will take effect from 1 March 2012 as a result of legislation to put an
existing concession on a formal basis (background information about the
legislation can be found in the consultation document published on 13
December 2010 and the Summary
of Responses to that document - the latter contains a link to
the consultation document at the bottom of page 3).
There should be no change for the majority of caravan site
owners. However, sites that currently supply exempt pitches in the
circumstances described below (see 'Who will be affected….?') should
check their position under the new guidance.
Who will be affected by the minor amendments?
You should review the VAT liability of your supplies if you
currently treat caravan pitch fees as exempt
in any of the following circumstances:
- the pitches are provided for less than a year
- the pitches are subject to an occupation restriction (such
as a planning term stating 'no caravan shall be lived in during
February') which prevents them from being lived on at all times
throughout the period for which the pitches are provided
- the pitches are on a holiday/leisure site
With effect from 1 March 2012, the criteria for treating your
pitch fees as exempt will be stricter to ensure that only residential
pitches qualify for exemption. Please see the new guidance below for
New guidance with effect from 1 March 2012
The guidance below is to replace paragraph 4.1 of Notice
'What is the liability of a caravan pitch?
Pitch fees or rents received for the granting of the right to
caravan owners to keep their caravans on pitches are either exempt or
standard-rated. Broadly speaking, the intention of the law is to exempt
pitches for caravans used as principal private residences.
The following table will help you to decide the liability of
your supply. Words highlighted in bold are
defined in the 'Notes' section at the bottom of the table.
The provision of pitches:
a) on holiday/leisure sites, regardless
of how they are used, except for those pitches occupied by employees of
site operators as their principal private residences
b) for restricted occupancy periods,
except in the circumstances described in '(c)' to the right.
The provision of pitches:
a) on permanent residential sites where
caravans can be lived in at all times throughout the year
b) on sites for Travellers where the caravans are used as principal
c) for restricted occupancy periods, but
• the site is not advertised or held out for holiday/leisure use, and
• the pitch is intended to be used as the occupant's principal
d) any type of site (including holiday/leisure
sites) if the pitch is occupied by a warden or other
employee of the site operator as his or her principal
|Notes and definitions
|1) In determining whether a site is
a 'holiday/leisure site', HM Revenue
& Customs (HMRC) will have regard to the way that the site is
held out/advertised. In most cases, it will be clear from advertising
material if a site is operated for holiday/leisure purposes.
|2) A pitch is for a 'restricted
occupancy period' if it is either provided for less than
a year or is subject to an occupancy restriction.
|3) An 'occupancy
restriction' is any covenant (for example, agreement or
term in a contract), statutory planning consent, site licence or
similar permission, the terms of which prevent the person to whom the
pitch is provided from occupying it by living in a caravan at all times
throughout the period for which the pitch is provided (such as a
condition that says 'no caravan shall be lived in during February').
|4) In the case of mixed use sites:
• any references above to 'holiday/leisure sites'
include holiday/leisure parts of mixed use sites
• any references to 'permanent residential sites'
include permanent residential parts of mixed use sites
|5) HMRC will accept that a caravan
is intended for use as a principal private residence
if the site owner holds evidence such as, proof of listing on the Valuation
Office Agency's (Opens new window) council tax register,
evidence that the occupier has received housing benefit to help with
the pitch fee, or agreements or contracts that indicate that the
caravan is intended to be used as the occupant's principal home. input
Pitch agreements impose certain obligations upon site owners
such as the construction of pitches, bases and the park infrastructure.
If you raise a one-off charge which is directly related to these
obligations it will follow the liability
of the supply of the pitch.
The input tax that is attributable to these supplies should be
determined accordingly. For information about input tax attribution,
see Notice 706 Partial exemption.'
New Notice 701/20 to be published shortly
The new guidance reproduced above will be incorporated into a
revised version of Notice 701/20 Caravans and houseboats in due course.
About the Author
© Crown Copyright 2012.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
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Article Published/Sorted/Amended on Scopulus 2012-02-29 11:17:15 in Tax Articles