Control issue

VAT treatment of long-term leasing of caravans

The taxpayer supplied caravans to the travelling community on long-term leases for use as their homes on sites under separate pitch agreements between occupiers and site owners – usually local authorities. It treated those supplies as zero rated under VATA 1994 Sch 8 Group 9 items 1 and 3. HMRC said they were supplies of accommodation in caravans. As such they were excluded from zero rating by Group 9 note (b) and were exempt under Sch 9 Group 1 item 1.

The First-tier Tribunal allowed the taxpayer’s appeal. It had agreed with HMRC that the supply was exempt but held that the assessments to collect input tax on the supplies had no legal basis. Both parties appealed.

The Upper Tribunal said the freedom to move the caravan was not relevant. The question was whether the taxpayer in leasing it...