New Rules Announced on Adapted Motorhomes
Confusion over recent years regarding VAT relief for motorhomes that have been adapted for use by disabled people has meant that some motorhome converters, manufacturers and dealers have been less eager to supply these vehicles. This in turn means that people with physical disabilities have found it difficult to find appropriate adapted motorhomes on the market.
The New Rules
HMRC has announced new rules regarding VAT relief on adapted motorhomes for disabled people. Previously, the regulations stated that adaptation had to be “substantial and permanent”, but it was unclear as to what exactly would qualify. The new rules, which have been welcomed by the NCC (National Caravan Council), make it clear that in order to be zero-rated for VAT, adaptation must be substantial and permanent and should be for a disabled person who uses a wheelchair. Lower-limb amputees and people who sometimes need a wheelchair due to degenerative conditions such as multiple sclerosis are also eligible.
This makes it much clearer that people who only occasionally use a wheelchair, such as in a shopping centre, do not qualify for VAT relief, and neither do users of mobility scooters. Another group who are clearly excluded under the new rules are people who are temporarily disabled due to, for example, a broken leg.
In part, this clarification has come due to a High Court case fought and won by CMC Reimo, who sold a number of adapted campervans at zero VAT. When the HMRC challenged this on the grounds that eight of the vehicles should not have qualified for motorhome tax relief, the company won the case in a landmark ruling.
Benefits of the New Rules
Motorhome dealers will be in a much better position to assist disabled buyers to purchase an adapted motorhome and to guide them as to their eligibility. There are also other rules that purchasers of zero-VAT-rated motorhomes must comply with. These include a restriction so that an eligible person will only be able to buy one every three years, and they or their nominated representative will also have to complete eligibility declaration forms before they can claim zero-rated tax relief on the purchase.
For dealers and other vehicle suppliers there is an obligation to provide HMRC with information regarding the zero-VAT-rated motorhomes that they have sold in a prescribed period of twelve months.
Disabled wheelchair users or their representatives will be subject to penalties if they provide false or incorrect information on the customer eligibility form.
Motorhome dealers generally welcomed the clarification provided by the new rules, although they are already careful about obtaining the relevant information from customers to ensure they are eligible. They also feel that having to sign an eligibility form will dissuade potential customers who do not have a genuine qualifying disability from trying to reduce their motorhome prices by fraudulently buying at a zero VAT rate.