Following the decision of the Upper Tribunal in the Colaingrove case, HMRC has accepted that verandahs sold with caravans should be treated as a single supply for VAT purposes
The HMRC opinion is set out in Brief 12/2015 following the decision in Colaingrove Limited v HMRC [2015] UKUT 0002.
In this case, the First Tier Tribunal (FTT) accepted that the verandah ‘served’ the static caravan. However, it held that this type of verandah was:
- a structure in its own right, payment for which formed a substantial part of the total amount paid for the verandah and caravan taken together;
- not integral or incidental to the static caravan; and
- an optional extra.
The FTT decided that there was a separate supply of the verandah which was subject to VAT at the standard rate.
Colaingrove appealed and the Upper Tribunal reversed the decision ruling that the sale of a static caravan with a verandah is a single supply for VAT purposes.
As a result of the Upper Tribunal decision, HMRC accepts that verandahs and decking structures sold with static caravans are to be treated as a single supply. As a result, the VAT liability of the verandah is the same as that of the caravan.
Notice 701/20: caravans and houseboats will be updated to reflect this change.
Brief 12/2015 is available here
The Upper Tribunal ruling, released on 15 January 2015, in Colaingrove Limited v HMRC [2015] UKUT 0002, is available here