§ Mr. Michael Forsythasked the Chancellor of the Exchequer if he will clarify his proposals for the tax treatment of income from letting caravans and pitches and the application to holiday caravan parks of the proposals on furnished holiday letting in clause 49 and schedule 11 to the Finance Bill.
§ Mr. MooreThe letting of caravans is regarded as an activity of leasing chattels which may amount to a trade if it is on a sufficient scale and organised and operated on a commercial basis. This can be determined only on the facts of each case and there can be no hard and fast rule of general application. Where the scale, organisation, and operation is such that it does amount to a trade, the income is assessable under case I of schedule D; in other cases under case VI.
Income from letting pitches, that is site rents, is assessable under schedule A to the extent that it arises from exploiting an interest in land. However, where the provision of associated services assessable under case I of schedule D, such as, for example, shops, accounts for a substantial part of the income, in practice the whole income will be included in the case I computation.
Clause 49 defines furnished holiday accommodation in terms which include caravans. Caravan park operators who let caravans and who are correctly assessed under case I of schedule D as traders will not be affected by the clause which would offer them no additional reliefs. But those assessed under case VI, and whose lettings meet the qualifying conditions, will be able to benefit from the capital gains tax reliefs and earned income treatment the clause provides in the same way as anyone letting other forms of self-catering holiday accommodation.
The clause does not apply to the letting of pitches or of residential caravans for long-term occupation.