Annex 1: Minor changes in the law made by the Act: Change 3: Caravan sites where trade carried on: section 20
This change gives statutory effect to ESC B29 (caravan sites where there is both trading and letting income).
ESC B29 states:
“Where the proprietor of a caravan site carries on material activities associated with the operation of that site which constitute trading, there may be included as receipts of that trade any site income from the letting of pitches for static or touring caravans, and any income from letting caravans where the letting does not of itself amount to a trade.”
The concession was introduced in 1984 along with the legislation subsequently consolidated in sections 503 and 504 of ICTA under which the letting of furnished holiday accommodation which does not amount to a trade is treated as a trade for certain purposes.
ESC B29 puts operators of caravan sites which include an element of trading into the same position as persons running furnished holiday letting businesses. In practice there is an element of trade, such as the operation of a site shop or the provision of leisure facilities such as a café, included in the operation of most caravan sites.
This change gives taxpayers who meet the qualifying conditions a statutory right to treat receipts from letting caravans or pitches as receipts of the trade of operating a caravan site.
This change is in taxpayers' favour in principle. But it is expected to have no practical effect as it is in line with current practice.