VAT (currently at 20%) is applicable of all of our buildings (including granny annexes) except in the following circumstances:
The term ‘caravan’ is not defined in the VAT legislation. In practice we base our interpretation on the definitions in the Caravan Sites and Control of Development Act 1960 and the Caravans Sites Act 1968.
A caravan is a structure that:
- is designed or adapted for human habitation
- when assembled, is physically capable of being moved from one place to another (whether by being towed or by being transported on a motor vehicle so designed or adapted), and
- is no more than
- 20 metres long (exclusive of any drawbar)
- 6.8 metres wide, or
- 3.05 metres high (measured internally from the floor at the lowest level to the ceiling at the highest level)
A ‘twin unit’ caravan can fall within this definition if composed of no more than two sections designed to be assembled on site by means of bolts, clamps and other devices, as long as, once assembled, it is physically capable of being moved from one place to another.
For a caravan to be regarded as designed for human habitation it must have the attributes of a dwelling, that is, it must consist of self-contained living accommodation. It would need to have washing facilities and the means to prepare food (such as kitchens and bathrooms).
We see the term caravan as including mobile homes (often known as residential park homes), static caravans (often called caravan holiday homes or lodges), but not motor caravans (often called motor homes).
A structure that fails to meet the conditions described above may constitute a building for planning purposes, in which case, the first sale or long lease of it may qualify for the zero rate of VAT under the conditions described in Notice 708 Buildings and construction.
For anyone making supplies of NEW caravans on or after 6 April 2013 it is necessary to establish whether or not VAT is chargeable:
- the supply will be standard-rated if it does not exceed either 7m in length or 2.55m in width
- the supply will be reduced rated if it exceeds either 7m in length or 2.55m in width and it is not manufactured to BS 3632:2005
- the supply will be zero rated if it was sold on or after 6 April 2013 and it exceeds either 7m in length or 2.55m in width and it is manufactured to BS3632:2005
For further clarification please click the link to the HMRC website.