I think what HMRC are trying to say is that although the sale will be exempt because of the dis-application of the Option to Tax due to the VAT1614D form, you may be required to pay back some of the input tax you claimed in 2014 IF the property was a Capital Goods Scheme item when you bought it, ie the net purchase price to you was £250K or more.
Hi, back in September the Chancellor announced that the period that the temporary reduced rate of VAT for hospitality, accommodation and admission was to be extended to 31/3/2020 but try as I might I cannot find any confirmation of this in any HMRC issued guidance.
I do not doubt that the period has been extended, after all the Chancellor announced it to the nation on TV, but when is HMRC going to issue confirmation, given that, some 6 weeks or more later, ALL HMRC guidance related to the temporary reduced rate still refers to the temporary 5% ending on 12/1/2021 ?
Thank you for your latest reply to my query but having read it, I am worried that I am missing some cryptic answer to my question.
You continue to refer me to section 4.1 of VAT Notice 701/20, stating that the reduced rating only applies to supplies that would otherwise be taxable.
Caravan pitches on holiday parks are not covered by the exemption for land and are therefore taxable and so the reduced rate could apply to them but I then come back to my issue of HMRC using the word 'seasonal' when referring to pitches that the reduced rate applies to.
In my experience, HMRC rely very much on the actual words used in their policy and guidance and so the fact that HMRC have used the word 'seasonal' implies that there is some importance to that word.
In your latest reply, you have said that some holiday sites are not regarded as having seasonal holiday trade if they are open for holiday trade all year round whilst (paraphrasing) others may have seasonal holiday trade as they are only open for part of the year (their holiday season).
I can therefore only interpret what you have said (without actually saying it) to mean one of two things. Either:
1. a holiday caravan site that is open all year round and is not regarded as having 'seasonal' holiday trade cannot apply the reduced rate to their annual pitch fee as that pitch fee is not regarded as 'seasonal'; or
2. the holiday season for a holiday caravan site that is open for trade all year round is the whole year and so an annual pitch fee is considered to be 'seasonal' for that site and so the reduced rate can apply to that annual pitch fee.
Could you therefore please confirm which of the above is the correct interpretation of the guidance and your advice.
I would say that if it is the latter, then it seems to me that the inclusion of the word 'seasonal' in the guidance issue by HMRC in regard to the application of the reduced rate to caravan pitches is both superfluous and confusing given that, in fact, the result would be that all caravan pitches on all holiday caravan sites would qualify for the reduced rate, irrespective of whether their 'season' was for a period shorter than a year or for a full year.
Thank you for your reply.
I had previously referred to the guidance at section 4.1 of VAT Notice 701/20 and recognise that the the supply of a 'pitch' on a residential site remains exempt from VAT and the temporary 5% VAT rate applies to supplies of pitches that are taxable.
The issue I am struggling with, and maybe I didn't explain it well enough before, is that while it is clear that the temporary 5% VAT rate only applies where a pitch is taxable, HMRC's guidance in VAT Notice 709/3 and in the guidance they issued at introduction of the temporary reduced rating refers to 'seasonal pitches' but goes no further to define what they mean by the term 'seasonal pitch'.
The fact that, in the guidance issued or updated in regard to the temporary reduced rate, HMRC have specifically used the word 'seasonal' when referring to a caravan pitch and having remained silent on or have excluded any reference to an annual fee (even if that fee may be described as a pitch fee) suggests that HMRC consider a 'seasonal' pitch fee and an 'annual' fee that may be described as a pitch fee as something different.
So the very crux of my query is: Does an annual fee, that may be described as a pitch fee or ground rent or some similar terminology and that is charged to the owner of a static caravan for siting it on a 'pitch' at holiday park site (not a residential park) fall within the temporary VAT rate reduction in the same way as a 'seasonal' pitch fee clearly would?
HMRC's guidance in VAT Notice 709/3 simply refers to the new temporary reduce rate applying to "seasonal pitches" but what do they mean by a seasonal pitch?
HMRC doesn't define what they mean by a seasonal pitch and from online caravan parks and the Caravan Club website it appears that the common understanding of a seasonal pitch is a temporary pitch for a specified period of time of less then a year, usually the holiday season, and provides for caravan users to only have to tow their van once to the site, park up and not have to take their caravan away again until the end of the season.
Based on that, then an annual charge covering a full year for a static caravans on non-residential caravan parks, which some parks refer to as ground rent, site fee or some other term, could not be considered a charge for a 'seasonal pitch' and therefore would appear not to qualify for the temporary 5% VAT rate.
Any online articles I've referred to to get advice simply refer to 'pitches' but no-one ever defines exactly what they mean by the word 'pitch' - is it restricted to payment for a pitch on a holiday park on which someone sites their caravan for less than a year and removes the caravan at the end of the 'season' or does it extend to include an annual payment for a pitch on a holiday site on which a static caravan stands all year round?
Can anyone throw any light on it and refer to any of HMRC's guidance that confirms this one way or the other?