Case Study: Holiday park owner receives almost £500,000 from HMRC thanks to unique VAT methodology
Background
Cotterhill Limited operates eight Maguires Country Parks across Northumberland, County Durham and North Yorkshire.
The family-run business, which was founded in 1981, primarily offers holiday homes and residential homes across its impressive portfolio of sites, with some also open for glamping and touring caravans.
How we helped
VAT Director Alex Nicholson made the clients aware of an opportunity to reclaim overpaid VAT thanks to a unique methodology he has devised for valuing the removable contents sold as parts of caravans and lodges.
Alex has spent many years working on the method to reflect the true value of these removable goods, which HMRC has now accepted as ‘fair and reasonable’, meaning other sellers of caravans and lodges could also receive substantial reimbursements for retrospective claims dating back four years [read more].
“Alex clearly explained the position that HMRC encourages taxpayers to take when accounting for VAT on unit sales and how he had devised his challenge to achieve a much better result for park operators, through his detailed knowledge of both the sector and how VAT applies to it.
“Once this was explained, we could clearly see that what Armstrong Watson had devised was a ‘fair and reasonable’ alternative to HMRC’s standard method which it says taxpayers are entitled to implement. The methodology for determining how much VAT was payable on sale was clearly the result of years of hard work, investment and negotiations with HMRC. As such, we engaged Armstrong Watson to pursue this opportunity on our behalf.
“All we had to do was allow Armstrong Watson access to our records, and they did the rest. They compiled the retrospective claim, going back four years; submitted this to HMRC; negotiated and amended this as required; agreed it and also agreed the implementation of a beneficial approach to future sales.” Scott Mounsey, Finance Director of Cotterhill Limited.
Results
Cotterhill Limited received a £495,000 reimbursement from HMRC as a result of this work - a victory that also paves the way for other caravan and lodge sellers to reclaim overpaid VAT.
This alternate methodology, whilst remaining compliant with VAT law, is a bespoke way of approaching the VAT on removable contents, as opposed to a suggested methodology that does not reflect the true economic reality of the sale.
“Alex and Emma Forrester were fantastic throughout the process and without them we would not be in the position we now find ourselves. We received a significant six-figure refund and now enjoy increased margins on each sale due to their work.
“As such, we would urge other caravan and holiday park owners to speak to Armstrong Watson to find out if they too could benefit from their expertise in this area."
Scott Mounsey, Finance Director of Cotterhill Limited.
To find out if your park’s caravan and/or lodge sales could also be eligible for a VAT reimbursement, please get in touch with Alex Nicholson on 01434 375550 or email alex.nicholson@armstrongwatson.co.uk
