Caravans and houseboats: removable contents
Removable contents in caravans are specifically excluded from zero-rating under VAT Act 1994, Schedule 8, Group 9, Note (a). It should be noted that the reference to ‘item 3 of Group 5’ in the legislation should in fact be to item 4. The term ‘removable contents’ is not defined in law and it is therefore necessary to apply the normal meaning of the phrase, such as ‘things contained’ or ‘things capable of being removed’. The term is deliberately intended to have a wide meaning and to have the effect of restricting the zero rate to the caravan structure and items that builders would normally incorporate in houses as building materials (see Schedule 8 Group 5 Item 4 and Note 22). Such items include electrical wiring, sanitary fittings, plumbing, etc. However, the legislation specifically excludes a number of items from being building materials, for example carpets, white goods in kitchens and fitted furniture. As a result, these items are always treated as removable contents where they are capable of being removed.
Removable contents also includes loose goods often supplied with caravans, such as furniture, soft furnishings, utensils and electrical goods.
Where, exceptionally, it can be shown that items are essential to the structure of the caravan they are not normally considered to be removable contents. The same applies to wardrobes formed by enclosing the space between walls and consisting of no more than a shelf and hanging rail. However, other configurations involving the use of side and internal panels would be considered to be fitted furniture (removable contents).
Arguments that the removal of items would be time consuming or involve the use of tools or specialist fitters should be resisted. Where items become faulty or damaged they will need to be replaced and are therefore capable of being removed.
The intention is to ensure, as far as possible, parity of treatment between houses and caravans. With houses, the effect of taxing contents is, achieved, at least in part, through a blocking order, but this does not apply to caravans.
In the ECJ case Talacre Beach Caravan Sales Ltd (Case C-251/05) it was argued that the effect of the ECJ decision in Card Protection Plan was that the company was making a single zero rated supply of a caravan and its contents. The ECJ, however, confirmed that as ‘removable contents’ were specifically excluded from the zero rate, the fact that the caravan and contents counted as a single supply, did not prevent the standard rating of the contents.