Respondents imposing VAT on caravan site — Appellant maintaining site should be exempt under provisions of Value Added Tax Act 1994 — Whether exemptions under 1994 Act contravening Sixth VAT Directive 77/388/EEC — Appeal dismissed
The appellant owned a caravan site, and let out pitches on the site by way of licence. Certain restrictions were placed on the manner in which the caravans could be used: the owners were not permitted to live in the caravans on a permanent basis and or to stay in them overnight during the winter months.
The respondent commissioners found that the operation fell within Group I of part II of Schedule 9 to the Value Added Tax Act 1994, and therefore incurred VAT. The VAT Tribunal upheld that decision, and the appellant appealed.
The court was required to consider the scope of the exemption in Article 13B(b) of the Sixth VAT Directive 77/388/EEC, which Group 1 of Part II was designed to implement. Under Article 13B, member states were required to exempt, inter alia, “immovable property excluding… accommodation… on sites developed for use as camping sites”, and were given the option to extend the scope of the exemption.
The question before the court was whether Article 13B(b) permitted a member state to charge VAT on the supply of licences for the parking of static caravans. The appellant maintained that, since the purpose of the legislation was to exempt the supply of land to final consumers, particularly residential consumers, on a long-term basis, such licensing on seasonal pitches should be exempt from VAT if the caravans were used for residential purposes.
Held: The appeal was dismissed.
In principle, the supply and leasing of immovable property so as to give rise to the long-term, passive occupation of property was exempt from VAT under Article 13B(b). However, this article provided for the exclusion of certain transactions from exemption, the common feature of the excluded transactions being that they entailed some degree of active exploitation of the immovable property, which justified additional taxation. Such “active exploitation” included the situation in which property or land was let for holiday purposes.
In general terms, the option available to member states to extend the exclusions under Article 13B(b) was wide; however, if a member state did decide to exercise the option, its objective in so doing must be consistent with the general rationale behind the lettings exemption: see, for instance, Blasi v Finanzamt Munchen 1 C346/95 [1998] All ER (EC) 211.
The court’s jurisdiction in the instant case was supervisory. It was not appropriate for the court to investigate the matter or to express any view on the manner in which the exclusions had been expressed. The test of “seasonality”, used to adjudge the manner in which the VAT exemptions regarding static caravan licences were assessed in the 1994 Act, was a reasonable way of identifying caravan sites that had been let for holiday purposes rather than for dwelling purposes, and the exclusion of such property from the lettings exemption was consistent with the rationale of the exemption.
The 1994 Act did not improperly discriminate between different types of lettings for use as dwellings: the manner in which, and the purposes for which, hotels, holiday cottages and caravans were used were not comparable.
Roderick Cordara QC and David Scorey (instructed by Eversheds on behalf of PricewaterhouseCoopers) appeared for the appellant; Rupert Anderson QC (instructed by the solicitor to Customs & Excise) appeared for the respondents.
Vivienne Lane, barrister
