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Caravan camp site - Property Income (

Caravan camp site - Property Income (

Client has spent cira £10,000 on providing a site, in his back gardern, for campers to pitch their tents and caravans overnight.

Most stay two or three nights.

They provide electicity and a toilet / shower block - which included in the price.

Is this enough to make it a trade - I suspect not!

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26th Dec 2012 06:24

I completely disagree

Your client has invested capital, has business assets (shower block, electric hook-up, water points), has costs arising from the use of water, electricity and land by campers and has income in the form of site fees and ancillary sales to campers.

There are regulatory risks in the form of local authority regulations of camp sites, risk of financial loss through campers doing a runner without paying, using more electricity than the income from site fees, etc,

Admittedly, it's never going to take on Apple, but it is a 'business' in every sense that makes a difference (investing capital and accepting risk in the hope of obtaining a profit). Certainly it's a very marginal business, but a business nevertheless, it just happens to be (presumably) unincorporated.

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26th Dec 2012 14:50

Badges of trade

Your client is trading, he is investing capital with the intention of making profit, unless he is a registered charity. HMRC will view this as trading.

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By Angaccs
28th Dec 2012 00:35

Borderline...

Expenditure of capital, insurance, financial risk,regulatory requirements... - all these factors are are present in other forms of property letting and that doesn't make property letting into a trade.

"...authorities establish that the owner of land may [my emphasis] carry on activities on the land that go beyond the mere exploitation of proprietory rights in the land and which constitute a trade. Where it is shown that there have been such activities, it is a matter of fact and degree whether they are sufficient to amount to the carrying on of a trade." Warner J in Webb v Conelee PropertiesLtd 1982[STC]913

As I think you have correctly discerned, your client has to focus on claiming to jump the hurdle in the second sentence of showing that the activities [service element] are sufficiently material to displace the primary presumption that this is merely property income from granting short term licences to occupy land. For example you have to talk up the provision, maintenance and cleaning of the washing facilities as a service provided and avoid conceding that provision of those facilities was merely a necessary pre-condition of receiving local authority permission for change of use.

Providing the client is aware of the downside I would say you just about have enough grounds to claim it is a trade, if he so instructs, but if HMRC resisted and it went to appeal my gut feeling is you'd lose

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