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Say NO! to VAT on Caravan Holiday Homes
 
Friday, 24 Nov 2017

Opposing VAT on Caravan Holiday Homes


VAT - HMRC summary of responses PUBLISHED
 

HM Treasury has written to the NCC to clarify their intentions and HMRC has published their responses to their consultation document on VAT: Addressing the borderline anomalies.

Points of particular importance from HM Treasury:

Removable contents: HM Treasury intend there to be no change to the VAT treatment of removable contents and these will continue to be subject to VAT at the standard rate (20%).

Used caravan sales: HM Treasury confirm that when a business (park or distributor) resells a used caravan originally purchased from a private individual, it will benefit from the second hand margin scheme. This means that the park or distributor can charge VAT on the difference between the purchase price and the sales price of the caravan.
Note: - the margin scheme does not apply to business to business transactions.

Key points to be aware of, if the new legislation is adopted as drafted:

  • The legislation will be published in the Finance Bill 2012 and the changes to caravans will come into effect on 6 April 2013
  • Any caravan manufactured to BS3632: 2005 (current standard for residential park homes) will be zero rated whether it is sited on a holiday or residential pitch
  • The legislation will provide for any static caravan occupied prior to 6 April 2013 that meets any of the previous versions of the BS3632 standard (1963, 1970, 1981, 1989, 1995) to benefit from zero rating on the resale
  • Caravans which exceed 7m long(static holiday caravans) or 2.55m wide (and which have to be towed by a heavy motor vehicle with a gross weight in excess of 3,500 kilogrammes) will be taxed at the reduced rate of 5%
  • Touring caravans less than 7 metres long will remain at the standard rate of 20%
  • Motorhomes will also remain at the standard rate of 20%

The notices of amendments to the Finance Bill have been published. Click here to view.

Debate in the House

It is anticipated that there will be a debate on the proposed legislation (amendments to the Finance Bill 2012) in the House of Commons next week (either Tuesday 3rd July or Wednesday 4th July 2012)

HMRC Guidance

HMRC has yet to issue guidance to ensure the legislation is, in the words of HMRC, 'simple and easy to operate'.

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