In Oak Tree Motor Homes v HMRC2 , the Upper Tribunal (UT) found that “motor homes”, “motor caravans” and “campervans”, are not “caravans” for the purposes of Value Added Tax Act 1994 (VATA) Schedule 8, Group 9, Item 1 and accordingly, they could not be zero-rated.

Background

Oak Tree Motor Homes Limited (the Appellant), sells vehicles commonly called “motor homes”, “motor caravans” and “campervans” (the Vehicles). The Appellant considered the Vehicles to be caravans for the purposes of VATA and treated them as zero-rated. HMRC disagreed.

The Appellant’s appeal to the FTT was dismissed. The FTT was of the view that the Vehicles tended to include facilities similar to those in residential accommodation and that those facilities were very similar in type and extent to those included in non-motorised touring caravans. However, the FTT also concluded that, in ordinary English usage and disregarding the legislative context, the word “caravan” did not include motorised vehicles. In the FTT’s view, “caravans” are vehicles that depend on an external source of locomotive power, rather than selfpropelled vehicles. Such a view is supported by the legislative context and the reference in VATA to size limits for trailers that can be towed by motor vehicles on the roads.

The Appellant appealed to the UT on three grounds:

1. the FTT erred in law when it determined the meaning of “caravans” based on the ordinary usage of the English language without regard to the definition of “caravan” provided in the Caravan Sites and Control of Development Act 1960 (the 1960 Act)

2. even if it is correct to disregard the definition of “caravan” in the 1960 Act, the FTT misconstrued the term caravans as that term is ordinarily understood and, in particular, should not have limited its meaning to caravans that are not self-propelled

3. the FTT was wrong to find that caravans do not include vehicles that are motorised.

UT’s decision

The Appellant’s appeal was dismissed by the UT.

In the view of the UT, “caravan” is an ordinary word in the English language and therefore its meaning is a question of fact not law. A decision on a question of fact could only be challenged in the UT if the FTT’s conclusion was unreasonable, in the sense that no tribunal could reasonably have reached that conclusion.

The UT was of the view that the FTT had been entitled to conclude that the Vehicles were not “caravans” for the purposes of VATA.

The FTT had also been correct to take account of the fact that the minimum size requirement in VATA referred to trailers towed by motor vehicles and did not refer to self-propelled vehicles. That was an indication that VATA was directed at vehicles that depended on an external source of locomotive power rather than self-propelled vehicles.

In case it was mistaken in its view that the meaning of “caravans” was a question of fact, the UT also considered the meaning if it was a question of law, and concluded that the outcome would be no different. There was nothing in the context and purpose of VATA to suggest that the word “caravans” was intended to apply to vehicles (whatever their size) that were capable of moving independently under their own power. The UT considered the purpose of VATA was to provide relief for caravans that performed the same function as houses or similar accommodation.

Comment

This case demonstrates the difficulty in identifying whether a particular question is one of fact or law. An appeal from the FTT to the UT can only be brought in relation to a question of law. Businesses seeking to claim a VAT exemption for the sale of vehicles under the caravans exemption will need to consider whether their vehicles are “self-propelled” as this element is central in determining whether a vehicle meets the definition of “caravans” in VATA.

A copy of the decision can be found here.