Caravan sites and VAT
You will have to register for VAT if your taxable sales are likely to be above the current VAT threshold. You will then have to charge VAT at the standard rate of 20% on some of your supplies - this is known as 'output tax'. You will be able to reclaim the VAT you pay on purchases - this is known as 'input tax'.
Every quarter you will pay HM Revenue & Customs (HMRC) the difference between:
- all the output tax you have charged
- all the input tax you have paid on your purchases
Nearly all businesses have to pay their VAT bill electronically - for example by direct debit or online banking. HMRC allows you some time at the end of each quarter before you have to pay the VAT due. So, for example, the VAT due on sales made in months one, two and three would be paid at the end of month four. Your VAT return will show your payment deadline date.
Businesses that are having trouble making their VAT payments, or are worried that future payments will cause them problems, can ask for help from the HMRC Business Payment Support Service. If your business needs this financial assistance to tide it over, HMRC will look at your situation and discuss temporary options that could help out. These could include letting you make payments over a longer period and waiving late payment surcharges. To discuss payment problems with HMRC you can call the Business Payment Support Service Helpline on 0300 200 3835.
Standard, zero rated or exempt
Standard rated supplies include:
- seasonal touring caravan, motor home and tent pitch fees
- site owned static caravan holiday lettings
- commissions earned on holiday booking services for privately owned holiday caravans
- repairs and maintenance on privately owned caravans
- off-season storage
The supply of new caravans is:
- standard rated if the caravan is no more than 7 metres long and 2.55 metres wide
- reduced rated if the caravan is more than either 7 metres long or 2.55 metres wide and is not manufactured to British Standard 3632:2005
- zero rated if the caravan is more than either 7 metres long or 2.55 metres wide and is manufactured to British Standard 3632:2005
The rules covering the sale of second hand caravans are the same as for new caravans unless the caravan is more than 7 metres long or 2.55 metres wide and it was occupied before 6 April 2013 and it is manufactured to BS3632:2005 or an earlier version of that standard. If all these conditions are met then the supply is zero rated.
Zero rating also applies to optional hook-up charges to water and sewerage services for touring caravans and motor homes.
Exempt supplies include:
- pitch fees at permanent residential caravan parks
- accommodation in caravans set aside for permanent residential use (ie not holiday accommodation)
The above list is not exhaustive and it is recommended that professional advice is sought so that the VAT liability of all the supplies you are likely to make is clearly established.
VAT Notice 700/1 Should I be registered for VAT?, VAT Notice 701/20 VAT treatment of caravans and houseboats and VAT Information Sheet 04/13 VAT: Taxing holiday caravans include a great deal of useful information and worked examples and you can download them from the Gov.uk website. For further guidance you can also call the VAT Helpline on 0300 200 3700.
Making Tax Digital (MTD) for VAT
Under HMRC's Making Tax Digital initiative, VAT-registered businesses with taxable turnover above the VAT threshold must keep records digitally and use special software to submit their VAT returns. You can find out more about MTD on the Gov.uk website.
Alternative flat rate scheme
You might be interested in an optional flat rate scheme (FRS) for eligible small businesses. Under this scheme you continue to issue tax invoices to VAT registered customers, but the VAT payable every quarter is calculated as a percentage of your VAT-inclusive turnover. You apply the appropriate flat rate percentage for your type of business. This scheme cannot be used with the retail schemes, the margin scheme for secondhand goods or the cash accounting scheme. You can find full details of the FRS, who can use it, and the flat rate percentages in VAT Notice 733, Flat rate scheme for small businesses. It will help you to decide whether or not the scheme is suitable for you.