Camper van hire

Camper van hire

My client runs a camper van hire business and with the increase in “staycations” bookings are through the roof. She hires the vans out for holidays or day trips, and they are also popular as wedding transport. She has also started selling face value vouchers at daily or weekly hire rates. Please could you advise on the VAT treatment given that there is currently a reduced rate for holiday accommodation.

 

HMRC have confirmed in VAT Notice 709/3 that the hire of what they describe as a “motorhome” will qualify for the temporary reduced rate provided it is specifically for holiday accommodation.  https://www.gov.uk/guidance/hotels-holiday-accommodation-and-vat-notice-7093#section5.  The temporary reduced rate is currently 5% until 30th September 2021, when it will increase to 12.5% from 1.10.21- 31.3.22. After the end of March 2022, it is expected the rate will revert to 20%, unless HMRC extend the temporary rate.

However, daily hires, whether for day trips or wedding transport (whether with or without a driver), will be standard rated as the vans are not being provided as holiday accommodation.

Usually, the sale of a voucher for this type of supply would qualify as a single purpose face value voucher, where the place of supply and liability of the redemption supply is known at the time of issue. However, in this scenario, if the vouchers could be redeemed for standard rated wedding or daily hire, or holiday accommodation at either 5%, 12.5% or 20%, then the vouchers would be treated as multi-purpose face value vouchers. As such they would be outside the scope of VAT when issued and VAT at the appropriate rate brought to account when redeemed.

It is also worth mentioning deposits. If a deposit is taken as a pre-payment to secure a booking, then it creates an actual tax point to the extent of the deposit value. If the booking is cancelled and the deposit retained, then it remains consideration and cannot be treated as compensation. https://www.gov.uk/government/publications/revenue-and-customs-brief-13-2018-change-to-the-vat-treatment-of-retained-payments-and-deposits

However, a deposit taken as a security against damage to the van is outside the scope at the time it is taken and if it is retained to cover the cost of repairing damage, then it remains outside the scope as compensation for the loss or damage incurred.

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