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One or More Supplies for VAT Purposes? Tribunal Gives Guidance

In a guideline ruling which helps to identify the somewhat wavy line between single and multiple supplies of goods for VAT purposes, the First-Tier Tribunal (FTT) has ruled that verandahs attached to zero-rated static caravans should not themselves be exempted from VAT.

caravansA supplier of static caravans (the company) had unsuccessfully applied to Her Majesty’s Revenue and Customs for a substantial VAT rebate on the basis that the verandahs should be viewed as an intrinsic part of the static caravans to which they are attached. Static caravans are zero-rated for VAT by virtue of group nine of schedule eight of the VAT Act 1994.

The company submitted that the verandahs and caravans, although sourced from different manufacturers, were almost always sold together as a package. It was argued that the verandahs provide an outdoor living space, similar to a patio or decking outside a house and that they are often essential to afford safe access to a static caravan.

In dismissing the company’s appeal, however, the FTT rejected the company plea that a verandah is part of a caravan just as chocolate on a biscuit is part of the biscuit. It could neither be said that the purchase of a verandah was ‘incidental’ to the purchase of a caravan nor that the former was an integral or necessary part of the latter nor that the two were ‘economically dissociable’.

The FTT noted that the word ‘caravan’ carries connotations of its Persian ‘wandering’ derivation and that the static caravans in question still retained enough possibility of movement to merit the epithet ‘caravan’. The same could not be said of the verandahs which, although not fixed to the ground, were not designed to be moved from one place to another.