Sale of Verandas with Caravans – HMRC clarify VAT position

As a result of the recent decision by the Upper Tribunal in the Colaingrove Ltd VAT case, HMRC have released business brief 12/2015 to update their stance on the VAT liability of verandas sold alongside new static caravans.

The previous stance held by HMRC was that a sale of veranda alongside a new caravan was a separate standard rated supply, even where the VAT liability of the caravan itself was either zero or reduced rated.

This view was challenged by Colaingrove Ltd who argued that the whole supply of the caravan and the veranda was one single supply and 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 specific basis.  If you feel your business may have been affected by this ruling, get in touch.

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