As a result of the recent decision by the Upper Tribunal in the Colaingrove Ltd. VAT case, HM Revenue & Customs (HMRC) has released business brief 12/2015 to update its position on the VAT liability of verandas sold alongside new static caravans.
The previous stance held by HMRC was that a sale of a veranda alongside a new caravan was a separate standard rated supply, even where the VAT liability of the caravan itself was either zero or at a reduced rate.
This view was challenged by Colaingrove Ltd. who argued that the whole supply of the caravan and the veranda was one single supply and that the VAT liability should follow that of the main supply, being the caravan, which depending on the make and model can benefit from either the reduced or zero rating.
Although the First Tier Tribunal sided with HMRC, this decision has now been overturned by the Upper Tier Tribunal and subsequently accepted by HMRC.
It is possible that claims can be made to HMRC for overpaid output VAT, but this will need to be reviewed on a case-by-case basis. At Milsted Langdon, our experience in working with caravan and holiday park businesses means we can provide objective, expert advice on developing strategic plans, including setting out goals and action plans. For more information, please contact us.