Have you or a disabled person you care for been hoping to buy a motorhome or have one adapted in the past few months?
If so, you’ll be pleased to hear that the rules for how you can claim much-needed tax relief have become a lot clearer.
Disabled people have in the past been always been able to avoid paying 20% VAT (or claim zero rating, as it is called) when buying specially modified motorhomes, or having existing models altered to suit their needs – for example by having ramps and hoists fitted.
But uncertainty about which alterations qualified and action taken by the HMRC against dealers it said were abusing the system have led to some companies pulling out of offering this service.
Others have severely reduced the number of adaptations they do. For example, Hilary Shortland, a director at van converter CMC Reimo, says the company has only produced three such vehicles since the tax man took her to court in 2014 – even though the company won.
Who and what qualifies?
But since the start of April 2017, new guidelines have come into force which should make clarifying who and what qualifies much easier to understand.
VAT Notice 1002, as it is called, says a disabled person does not have to pay VAT on an adapted motorhome so long as they usually use a wheelchair.
This would include people who have a degenerative condition who sometimes do not need to use wheelchair. It can also apply to people who have had a lower limb amputated.
But it would not apply to people who are only using a wheelchair because of a temporary illness, and would not apply to anyone who uses a motorised scooter.
Even still, you will only be able to make one such zero rating application every three years, unless the vehicle is stolen or damaged beyond repair, or if your condition or that of the person you care for deteriorates so much that the vehicle you bought is no longer fit for purpose.
Onus on the owner
In addition you, working with your dealer, will have to fill in an eligibility form that must be sent to HMRC within 12 months of the purchase or alteration being made.
There is a much stronger emphasis in this new advice on the customer being responsible for explaining why they do not need to claim VAT, rather than the dealer – something the industry, perhaps not surprisingly, has welcomed.
New penalties have also been introduced which could mean anyone incorrectly applying for zero rating could have to pay the VAT in full.
What about those who don’t use a wheelchair?
But what if you are or care for a disabled person who does not use a wheelchair? Well, you can still claim for zero rating on the cost of the changes made to your motorhome, if not the vehicle itself. But to qualify, the modifications will need to be permanent.
That seems to mean that the adaptations should be bolted or welded to the vehicle or wired into the electrics, and should be in situ for three years or for the lifetime of the vehicle – whichever is the shorter period.
HMRC has rather helpfully included a list of common alterations that would not qualify. These include fitting an automatic transmission, or parking or reversing sensors – you don’t need to be disabled to want to have those fitted.
It’s worth pointing out at this stage that the guidance also warns that, if you are applying on a disabled person’s behalf, you are likely to have to answer a number of additional probing questions.
These include who is paying for the vehicle, who the registered keeper is, where it is to be stored and whether you as the carer have another vehicle for your own use. Again, this is designed to prevent people manipulating the system when there isn’t really a clear need.
A welcome clarification
So, do these new guidelines clarify what had been very muddy waters? The National Caravan Council certainly seems to think so. Its deputy director general, Alicia Dunne said: “It is good that HMRC has moved to remove any uncertainty in the regulations.”
Hilary Shortland, back at CMC Reimo, also thinks the latest advice is useful, because she acknowledges that there has been abuse in the past. “The customer has to be much more responsible now,” she said.
She is also glad to see that HMRC has toned down some initially suggested proposals which she says would have meant that to be eligible, the modification would have had to amount to 40% of the value of the vehicle. “You don’t want to make it so that the ’van would be difficult for an able-bodied person to use,” she added.
She is concerned that there might still be some issues that need ironing out, such as the precise nature of a ramp.
On the right road
Nirvana Mobility meanwhile, came back into supplying adapted motorhomes last year, after a break of some years, by showing three new Spanish-built models at a recent NEC show. Its director, Mark Sharp, is concerned that the three-year rule may be too restricting.
However Kate Birch, commercial director of Coachbuilt GB, another specialist in this area, thinks both such worries are unwarranted.
“People who buy our motorhomes are in for the long-term and want them to be future-proofed,” she told us. “These new guidelines are straightforward and mean there are no longer any grey areas that could be abused.”
It remains to be seen whether, that being the case, companies who left the market will now want to come back into it.
In the meantime, at least disabled motorcaravanners and their carers have a better idea about what to expect as they pursue their touring dreams.
New guidelines have come into force which should make clarifying who and what qualifies much easier to understand