The High Court has rejected a claim by a caravan park operator that its business should be exempt from VAT.
Colaingrove Ltd, which operates 22 caravan parks throughout the UK, claimed that, because its customers were not permitted to live permanently in their caravans and were not allowed overnight stays between December and February, its services were akin to the provision of hotel accommodation and were therefore not liable for VAT payments.
Rejecting the company’s claim, Jacob J said that the provision of seasonal pitches could not properly be described as being similar to hotel accommodation. He held that there was no rational reason why UK authorities should not tax seasonal pitches if that was their policy.
Colaingrove provides 22,000 permanent pitches for holiday caravans nationwide, as well as a range of facilities for caravan owners, such as swimming pools, entertainment facilities and crazy golf.
It argued that, under the Sixth Council Directive 77/388/EEC, member states were required to exempt from VAT the provision of accommodation in the hotel sector or in sectors with a similar function. If long-term hotel accommodation were exempt, it claimed, the same should apply to its services, which arguably performed a similar function. It further alleged that the sections in the Value Added Tax Act 1994 subjecting the provision of seasonal pitches to VAT were therefore beyond the powers given in the directive.
However, Jacob J said: “I have reservations about whether the provision of a seasonal pitch can properly be described as being in the hotel sector or in a sector with a similar function. There is a permanency about a seasonal pitch that is absent from the hotel function, which may take it outside the notion intended by the exemption. Moreover, seasonal pitches are not really in competition with hotels.
“I find nothing irrational or discriminatory about the UK deciding to treat long stays in hotels differently from seasonal pitches.”
Rejecting Colaingrove’s calls to refer the matter to the European Court of Justice, he added: “I can see no real Community interest engaged in the issue as to how the UK chooses to treat seasonal pitches for VAT purposes.”
References: PLS News 17/4/03
