Revenue & Customs v Tallington Lakes Ltd.

For VAT purposes, a caravan pitch is a seasonal pitch where the licensee is prevented from living in the caravan throughout the relevant period by an operative contractual term or planning condition. A restriction remains relevant if it is expressed in the documents but has ceased to be enforceable because the planning enforcement period has expired; after that period it has no effect. The court must also determine the actual contractual terms, including whether prior conduct has varied or removed a restriction. A standard term applied to all pitch licences was not confined to areas subject to the planning condition. Seasonality does not require the pitch to be restricted to holiday use. VAT was therefore chargeable on the pitch licences.

The Commissioners appealed against a decision of the VAT & Duties Tribunal, released on 9 January 2007, concerning supplies of caravan pitches by Tallington Lakes Ltd. The Tribunal had held that the pitches were exempt supplies of land rather than standard-rated supplies of seasonal caravan pitches.

The company sought repayment of VAT paid on pitch rents for 2001–2003 and treated later pitch rents as exempt. The central issues were whether contractual terms and planning permissions prevented occupation during February, whether those restrictions had ceased to operate or had been varied by conduct, and whether the relevant statutory time limit affected part of the repayment claim.

1. Appeal allowed. The Tribunal’s decision could not stand. Both the contractual and planning restrictions on occupation during February applied during the relevant period, so the company supplied seasonal pitches within Schedule 9 to the Value Added Tax Act 1994. VAT was chargeable on the grant of the pitch licences.

2. A contractual restriction must be assessed by identifying the terms actually applicable to the annual licence. The words printed in standard terms are not conclusive. An oral variation, or the only reasonable inference from the parties’ prior conduct, may establish that the restriction was excluded. Here, the company’s failure to enforce the restriction did not establish variation because that conduct was explained by the absence of planning enforcement and deletion would have prejudiced the company while the planning condition remained operative.

3. A planning condition is enforceable only for the statutory period. Once that period expires without enforcement action, the condition remains on the permission but is a dead letter and no longer prevents occupation. The local authority’s knowledge or attitude is irrelevant. Under section 171B(3) of the Town and Country Planning Act 1990, the recurring February restriction was subject to a ten-year period, not the four-year periods in section 171B(1) or (2). The period had not expired during the relevant VAT periods.

4. Clause 7 applied to all pitch licences. The reference to “no mobile home” was not limited to areas covered by the planning condition, and the words referring to planning permission explained the reason for the restriction rather than qualifying its scope.

5. The statutory concept of a seasonal pitch is distinct from holiday accommodation. The fact that the mobile home could be used as a principal private residence did not prevent the pitches from being seasonal.

6. The alternative limitation issue was also considered. The three-year limit in section 80(4) of the Value Added Tax Act 1994 applied to claims arising only after its introduction. The claim for period 03/01 was out of time; the claim for 06/01 was not. This issue did not determine the appeal in light of the main conclusion.

7. The company was given liberty to make submissions on its request to remit the matter to the Tribunal following the production of an earlier version of the standard terms.

• High Court (Chancery Division): allowed HMRC’s appeal against the VAT & Duties Tribunal’s decision released on 9 January 2007.