In Oak Tree Motor Homes Limited v HMRC [2017] UKUT 0027 the Upper Tribunal held that self-propelled vehicles were not ‘caravans’ for the purpose of VAT zero rating.
The VAT Act 1994 provides for zero rating of caravans which exceed the permitted size limit for trailers drawn by motor vehicles.
The term ‘caravan’ is not defined in the VAT legislation. VAT Notice 701/20/04 states that, in practice, HMRC follow the definition in The Caravan Sites and Control of Development Act 1960 (the ‘1960 Act’).
- The taxpayer sold a variety of vehicles which it described as motor homes, motor caravans and campervans.
- They claimed a refund of output tax on the basis that these should have been zero rated as they were caravans.
The First Tier Tribunal (FTT) agreed with HMRC that the vehicles were not ‘caravans’ for the purposes of zero rating as they were self-propelled vehicles.
The UT have now upheld that decision:
- There was nothing in the context or purpose of the VAT Act to suggest that the term ‘caravans’ was intended to apply to vehicles capable of moving under their own power.
- This interpretation of ‘caravans’ excluding self-propelled vehicles is reinforced by the use of the size limit for trailers as a qualifying condition.
- The definition of caravan in the 1960 Act was not relevant to VAT: if it was then the legislation would have referred to it.
- The fact that HMRC’s guidance refers to the 1960 Act was irrelevant: the guidance does not have force of law and, in any event, did not reproduce that part of the definition which the taxpayer sought to rely on.
The taxpayer’s appeal was therefore dismissed.
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Case reference: Oak Tree Motor Homes Limited v HMRC [2017] UKUT 0027
