Jurisdiction(s):
United Kingdom

UK FTT permits retrospective adoption of more accurate VAT output apportionment; substantial difference suffices, no need to show error (Abbeyford Caravan Company v HMRC)

Published on: 29 October 2024

Published by a LexisNexis Tax expert

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Article summary

Abbeyford Caravan Company (Scotland) Ltd v HMRC [2024] UKFTT 928 (TC)

The appellant traded in caravans supplied with removable contents, quoting a single, bundled price for each unit and its contents. Provided certain conditions are met, a caravan sale can fall within either the reduced VAT rate or the zero rate under the Value Added Tax Act 1994:

the reduced rate in Group 12 of Schedule 7A to VATA 1994, or
the zero rate in VATA 1994, Sch 8, Grp 9

Both VATA 1994, Sch 7A, Grp 12 and VATA 1994, Sch 8, Grp 9 exclude removable contents sold with caravans. This means those contents are, in general, standard-rated, even where the caravan itself qualifies for the reduced or zero rate. On resale, the appellant had historically mirrored the manufacturers’ allocation, assigning the same proportion of its selling price to removable contents as the split used when purchasing the caravans. It later determined this approach overstated the amount treated as standard-rated goods. Crucially, what a caravan manufacturer regards as removable contents is not the same as the concept of...

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