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caravan - capital loss

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A Client has sold a static caravan - capital allowances were never claimed (it didnt meet letting rules and was on a residential site)

The caravan was let to the public and had an element of private use, its been sold for a loss - question is can the loss be put on the tax return as a capital loss?

It was sold for £13000 and being a caravan i would estimate the useful life to be less than 50 years.

thanks for any input - 

Jonathan 

 

 

 

Replies (57)

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By Duggimon
18th Jan 2017 11:00

Probably not, presumably you've already looked in to whether it could qualify as plant and machinery and it does not, ergo as a wasting asset not eligible for capital allowances the capital loss cannot be claimed.

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Replying to Duggimon:
Portia profile image
By Portia Nina Levin
18th Jan 2017 11:31

Why is it a wasting asset? Pray tell?

Only when you have told will you have answered the OP's actual question. The answer to which can be found in CG76550, incidentally.

Remember, we represent taxpayers, and not HMRC.

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Replying to Portia Nina Levin:
By Duggimon
18th Jan 2017 11:37

Useful life of less than 50 years and not plant. I inferred as much from the question.

Either could be up for a challenge hence the "probably" in my answer but based solely on information given I'll stand by my probably not.

I suppose my biggest assumption is that capital allowances were never claimed because the OP already determined there was no grounds on which they could be.

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Replying to Duggimon:
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By Portia Nina Levin
18th Jan 2017 11:38

Tangible MOVEABLE property.

STATIC caravan.

How gives a toss about its useful life.

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Replying to Portia Nina Levin:
By Duggimon
18th Jan 2017 11:55

Static caravans are surely moveable? If they weren't they would be buildings. They don't have to have been moved to be moveable.

Maybe it's my understanding of caravans that's deficient.

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Replying to Duggimon:
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By Portia Nina Levin
18th Jan 2017 12:20

Apparently so.

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Portia profile image
By Portia Nina Levin
18th Jan 2017 12:28

CG64325 may also be useful to the OP in claiming the capital loss.

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Replying to Portia Nina Levin:
By Duggimon
18th Jan 2017 12:25

Since I thought I'd best look it up myself I'll just add it's CG64325

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Replying to Duggimon:
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By Portia Nina Levin
18th Jan 2017 12:28

That is what I said. :)

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Replying to Portia Nina Levin:
By Duggimon
18th Jan 2017 12:35

Turns out the extraneous 3 was moveable when I thought it was static.

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Portia profile image
By Portia Nina Levin
18th Jan 2017 12:20

See also the position of the fairground carousel in CG60960.

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By jonibarnes
18th Jan 2017 14:24

Thanks both for the input

capital allowances definitely couldn't me claimed and i cant imagine that a caravan ever has a useful life of more than 50 years?

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Replying to jonibarnes:
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By Portia Nina Levin
18th Jan 2017 14:31

Yes, yes, yes.

So, if you want to claim the loss, you must argue that it is not tangible moveable property with a life of less than 50 years, because it is not moveable. See the parts of the Capital Gains Manual that I have referred to.

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By jonibarnes
18th Jan 2017 18:51

Just occurred to me it's definitely moveable. It's been bought by another caravan park and moved site.

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Replying to jonibarnes:
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By Portia Nina Levin
18th Jan 2017 18:58

The fact that it has been moved does not necessarily mean that it is moveable. It does not help the argument, but is not necessarily the end of it.

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Replying to Portia Nina Levin:
By Ruddles
18th Jan 2017 21:57

As my grandfather used to say, anything is moveable if you use a big enough hammer.

Without knowing the precise facts, I'd lean towards the caravan as not being treated as a chattel, particularly given the reference to semi-permanence in the guidance referred to.

I wonder how they treat houses in Australia - Queensland in particular, where moving home often means just that - my son thought it hilarious to see a whole house on a flatbed travelling along the highway.

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Replying to Ruddles:
Hallerud at Easter
By DJKL
18th Jan 2017 22:12

There are two timber farm buildings/houses in our hamlet in Sweden that I was advised by my neighbours originated much further down the road and were moved to their current location circa late 19th century; a fair feat of engineering given I have difficulty even cycling up the hill and usually dismount and push the bike up the last stretch.

There is a whole collection of preserved buildings in Arhus, Denmark, that were relocated to their current location, Den Gamble By

http://www.dengamleby.dk/viden/der-var-engang-foer-1900/

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Replying to Portia Nina Levin:
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By Justin Bryant
19th Jan 2017 10:28

PNL, I disagree. The definition of a chattel has two tests, which must both be passed for an item to be a chattel. The degree of annexation to the land and the purpose/object of annexation and the latter test displaces (i.e. “trumps”) the former test (if it is met). It is the purpose that the object is serving that must be regarded; not the purpose of the person who put it there. Almost by definition, something described as a caravan cannot have a purpose of being permanently affixed to land; unlike a wall or a building etc. At most, it’s attached to the land merely for the more complete enjoyment and use of it as a chattel – which rebuts any presumption that it is a fixture due to its degree of annexation to the land. I am happy to be proved wrong with a relevant caravan legal case. The HMRC CG manual does not really analyse this area of law fully or properly and there is support that caravans are chattels in HMRC's SDLT guidance.
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg76550

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Replying to Justin Bryant:
By Ruddles
19th Jan 2017 10:46

Your disagreement with Portia convinces me that she is correct. As HMRC themselves say, the asset does not have to be permanently fixed to land to fall outside the definition of a chattel (in the very guidance that you cite).

That same guidance says that "A chattel is defined as anything which is tangible moveable property". Where does it say anything about purpose? It is either tangible moveable property or it is not. A caravan can certainly be touched. The only question that needs to be answered is - is it 'moveable'?

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Replying to Ruddles:
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By Justin Bryant
19th Jan 2017 10:59

Obviously in this case, yes, so it's a chattel - which is consistent with the SDLT treatment.

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Replying to Justin Bryant:
By Ruddles
19th Jan 2017 11:40

Why "obviously"? As has already been pointed out, the fact that something can be moved doesn't make it moveable for the purposes of the CGT legislation. What part of "semi-permanent" are you having difficulty with?

Treatment as a non-chattel would also be consistent with the SDLT treatment if that were also to treat it as a non-chattel, which is a distinct possibility.

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Replying to Ruddles:
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By Justin Bryant
19th Jan 2017 11:45

You appear to have possibly overlooked the above comment "Just occurred to me it's definitely moveable. It's been bought by another caravan park and moved site."

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Replying to Justin Bryant:
By Ruddles
19th Jan 2017 11:50

I didn't overlook it all - I disregarded it as an ill-informed and probably incorrect conclusion. But if the OP wants to treat it as moveable I'm not going to waste time trying to convince him to do otherwise.

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Replying to Ruddles:
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By Justin Bryant
19th Jan 2017 12:04

Interesting how a fact can be an "incorrect conclusion".

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Replying to Justin Bryant:
By Ruddles
19th Jan 2017 12:21

Interesting how one doesn't understand the possibility of drawing an incorrect conclusion from the facts (and indeed when not all of the facts are known). The fact that something is physically moveable does not necessarily make it moveable for tax purposes. Interesting that some find that simple concept so difficult to grasp.

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Hallerud at Easter
By DJKL
19th Jan 2017 10:52

Does the particular object being discussed maybe need better defining?

https://www.sellmygroup.co.uk/blog/the-difference-between-a-park-home-ca...

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By jonibarnes
19th Jan 2017 11:01

Thanks for all the input, i think we have established that its debatable and as said client has no gain to offset a loss against this year (he does have a property which he will realise a gain on at some point) i am leaving it of the return this year - (deadline looming) and will return to it in February when i have more time.

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By Justin Bryant
19th Jan 2017 11:39

I am fortified in my view by the reference to caravans as chattels (c.f. bungalows on bricks) on page 7 of the guidance in the link below:

http://www.falcon-chambers.com/images/uploads/articles/Battles_about_cha...

The practical test would appear to be that, although used as a dwelling, if it's possible to move it elsewhere without damage (e.g. by hooking it up to a 4 wheel drive vehicle etc. and towing it away), then it’s a chattel.

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Replying to Justin Bryant:
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By tjw
19th Jan 2017 12:35

I don't know if it's uniform but the static caravans I've used in the past have had permanent plumbing and electrics, in particular, a permanent sewage connection and mains water and electricity.

On page 5 of your same document that seems to indicate that that would afford a presumption that this is a fixture.

Further more, all of the ones I've seen have been up on bricks pillars and incapable of being moved other than via the use of specialist equipment.

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Portia profile image
By Portia Nina Levin
19th Jan 2017 12:15

As with Ruddles, the fact that Justin thinks that it is a tangible moveable property (and, as usual, can provide tenuous links that when examined tend to not actually support his assertions) merely serves to fortify my view that it is not.

However, I would accept the position that, as a matter of property law, a caravan is personal property (aka a chattel), rather than real property or intellectual property.

We are not concerned with property law and whether it is a chattel though. We are concerned with tax law and whether it is tangible moveable property to which the exemption in TCGA 1992, section 45, and those things are not necessarily synonymous.

Having been moved and being capable of being moved are also not synonymous with being moveable for that purpose.

I do not think that anybody is suggesting that the argument is cut and dried. Merely that, depending on the precise facts, the OP might have a case for arguing that it is outwith the section 45 exemption, such that there is a tenable basis for the loss to be claimed.

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Replying to Portia Nina Levin:
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By Justin Bryant
19th Jan 2017 12:02

Ad hominem arguments tend to be good evidence that the person making them is wrong, but I am happy to be proved wrong with a relevant legal case as usual.

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Replying to Portia Nina Levin:
By Ruddles
19th Jan 2017 12:30

Just a couple of other points to add to the mix:

The OP says that the home was situated on a residential site (as opposed to a holdiay park). That suggests that it had been used as a dwelling. Hmmm...

Much is made of the question as to whether the asset can be (re)moved without damaging the land and/or surroundings. Just my view, and not (as far as I am aware) supported by any case law or other basis, is not also appropriate to consider whether the land etc is damaged when the asset is 'fixed' to it? Siting a static caravan involves (at least in the park near my office) much more than merely plonking it down and hooking up a couple of pipes and cables - a good deal of work on the land itself is involved, often including the laying down of concrete.

As for JB's suggestion of towing a static caravan behind a 4x4 - yeah, right.

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Replying to Ruddles:
By cheekychappy
19th Jan 2017 12:34

JB is a clown.

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Replying to cheekychappy:
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By Portia Nina Levin
19th Jan 2017 12:48

Do you mean one of those scary clowns that stands in the woods and jumps out at small children>

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By Justin Bryant
19th Jan 2017 14:06

Cheeky Chappy, Ruddles (I expect you are probably the same person) I think you overlooked the "etc." and a crane + low loader would be just as good re moving it without damage.

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Replying to Justin Bryant:
By Ruddles
19th Jan 2017 14:21

I didn't overlook the etc at all - I was commenting on the absurdity of your suggestion that you could hook a static caravan to your 4 x 4 and tow it away. I'd like to see the state of your vehicle, the caravan and the road having dragged it (no wheels on a static caravan, remember) up the M6 for 10 miles.

And if you were to use a low loader you'd be carrying the caravan, not towing it - so in any event there was nothing to suggest that you were even thinking of a crane and lowloader in your use of "etc" (which the intelligent normally use when describing a group of similar items). As observed elsewhere, you twist and turn like a twisty turny thing.

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Replying to Ruddles:
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By Justin Bryant
26th Jan 2017 12:17

Fyi the case below indicates that I am right re the key "moveable" caravan point.
http://taxandchancery_ut.decisions.tribunals.gov.uk/Documents/decisions/...

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Replying to Justin Bryant:
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By Portia Nina Levin
26th Jan 2017 12:26

ROFL. It does no such thing Justin, unless you are trying to prove your point to a female friend of Peter Pan who is not called Wendy.

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Replying to Portia Nina Levin:
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By Justin Bryant
13th Feb 2017 10:52
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Replying to Justin Bryant:
By Ruddles
13th Feb 2017 11:48

I'm not aware of any printing presses that are suitable for use as accommodation - are you?

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Replying to Justin Bryant:
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By Portia Nina Levin
13th Feb 2017 11:56

Moron.

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Replying to Portia Nina Levin:
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By Justin Bryant
13th Feb 2017 12:02

I think you both missed para 42 here:

http://www.bailii.org/ew/cases/EWCA/Civ/2011/912.html

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Replying to Justin Bryant:
By Ruddles
13th Feb 2017 12:28

After you, Portia ...

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Replying to Ruddles:
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By Justin Bryant
13th Feb 2017 12:32

For your benefit, the judge said there that a caravan is a chattel if it is moveable, which is exactly what I have said above.

I doubt PNL has another case stating the opposite.

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Replying to Justin Bryant:
By Ruddles
13th Feb 2017 13:35

I know exactly what the judge said, and no-one is questioning that a moveable caravan is a chattel. The judge did not, however, say that all caravans are moveable. The question - which you have spectacularly failed to address - is whether the caravan in this particular instance is moveable. Portia and I have both conceded that it might be - but there is not enough to confirm one way or the other.

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Replying to Ruddles:
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By Justin Bryant
13th Feb 2017 14:08

I think you would be quite good working for Donald Trump answering questions from the press etc.

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Replying to Justin Bryant:
By Ruddles
13th Feb 2017 14:36

Better to work for Trump than to behave like him.

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Replying to Ruddles:
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By Justin Bryant
21st Jun 2017 18:19

See also para 7 of the case below:

"A caravan is plainly a chattel;"

http://www.bailii.org/uk/cases/UKUT/TCC/2017/239.pdf

This despite the occupant having no right to move it in that case.

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Replying to Justin Bryant:
By Ruddles
21st Jun 2017 19:01

Well done for finding another piece of case law that does nothing to support your argument.

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Replying to Justin Bryant:
Portia profile image
By Portia Nina Levin
22nd Jun 2017 10:45

Justin, I repeat, the question is not whether a caravan is a chattel (I've agreed that it is); the question is whether it is tangible moveable property. There is no question that it is tangible property. The fact that a static caravan has been moved at some time, or is capable of being moved, does not make it [ordinarily] moveable.

Here's a little song for you:
https://www.youtube.com/watch?v=moSFlvxnbgk

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