COVID-19 regulations on non-domestic rates relief are defective in allowing some caravan site operators, and some caravan owners, relief on non-hospitality caravans, sometimes caravans they do not own

At the beginning of lockdown in March 2020, the Non-Domestic Rates (Coronavirus Reliefs) (Scotland) Regulations 2020 (SSI 2020/101; the “Relief Regulations”), gave temporary rates relief for financial year 2020-21 to businesses assumed to be unable to use their premises to generate sufficient profits during enforced closure. They were extended to 2021-22 by SSI 2021/151.

The Scottish Government regarded the category of “hospitality”(1) as being particularly vulnerable, and the regulations included two particular (overlapping) classes, the subject of this article, which it regarded as being within that category. These were use as a “caravan”, being “any structure designed or adapted for human habitation which is capable of being moved from one place to another”; and use as a “caravan site”, being “land on which a caravan is stationed for the purposes of human habitation”, including the associated common parts of the site.

These definitions are incorporated by reference from the Caravan Sites and Control of Development Act 1960 (Relief Regulations, sched 1, classes 3 and 4), which Act was concerned with licences to control conditions on various kinds of caravan sites, and not limited to “hospitality”. Some clarification is required to understand the ramifications of this.

Caravans as “hospitality”

Basically there are three operational models for static caravan sites.

Model 1. Caravan site operators license a pitch for the siting of a privately owned caravan for permanent use. These are generally called “residential caravans” or “park homes”, are charged council tax, and have some security of tenure under the Mobile Homes Act 1983. They are clearly not “hospitality”.

Model 2. Caravan site operators license a pitch for the siting of a privately owned caravan for restricted time use (typically 10 months in each successive year), usually to conform with planning requirements. These often tend to be called “holiday” caravans, but this is a misnomer because they can be used for (possibly limited) residential use and any other purpose permitted by site rules. I will call them “licensed caravans”. These owners just have normal legal rights under contract and consumer protection law, exactly as they would if they bought a car and rented a space in a car park.

Model 3. Caravan site operators hire out their own caravans for temporary holiday use, properly called “holiday-let caravans”.

In most respects, model 2 licensed caravans differ from “holiday-let” caravans. The owners repair their own caravan, and need to insure it, as the site operator has no insurable interest. Pitch licence fees for model 2 licensed caravans are usually paid annually in advance, which ensures that the site operator is fully funded for the year in advance of providing the agreed services, such as utility supplies and maintaining the common parts, and contractually cannot deny licensed owners access to the site. Licensed caravans can therefore by no stretch of the imagination be classed as “hospitality”. Licensed owners pay rates on the value of the infrastructure (the caravan), as limited by the licence conditions.(2) These are therefore not rates payable on anything connected with “hospitality”.

Based on the explanation above, the regulations should not be relevant to licensed caravans and the pitches they occupy, as they do not involve “hospitality”, but despite defining caravans as simply for “the purposes of human habitation”, the regulations apparently accept the link (clearly of both holiday-let and licensed caravans) with hospitality. The cross-heading to reg 4 of the Relief Regulations clearly sets out the overall intentions – “Relief for lands and heritages used for retail, hospitality or leisure purposes” – and both types of caravans are treated as included in the rates exemption for hospitality.

Who benefits?

The Scottish Government has no doubt that both pitch and caravan owners are entitled to rates relief as running a “hospitality” business. Licensed caravan owners, who provide hospitality to no one and certainly don't run a business, and the site operators who also don't provide hospitality to licensed caravan owners, therefore both get an entirely unjustified relief from rates, at taxpayers' expense. Those (many) site operators who effectively collect the rates on the caravans of individual licensed owners by including them in an overall pre-agreed site fee, will get also the remarkable benefit of taxation relief on someone else's property.

One bright spot for the taxpayer, who is foregoing rates receipts into public funds, is that the relief is not blanket but limited to any “day... where... the lands and heritages are wholly or mainly used on that day for” the specified purposes”. Whilst, therefore, any caravan site is routinely closed for the winter it has to pay the usual rates.

As has been noted elsewhere generally on COVID controls (32nd Report of UK Joint Committee on Statutory Instruments, para 3.5), these regulations were necessarily made in haste, but they are unfortunately not the Scottish Government's finest hour. One would have thought that inter-departmental consultation within the civil service would have flagged up these problems.

The regulations also include a disturbing new element. By reg 4(6), “Where a use of lands and heritages has been suspended temporarily as a result of Scottish or UK Government requirements or advice in connection with... coronavirus..., that use of the lands and heritages is to be regarded... as having continued as if it had not been suspended”. This provision arguably not only endorses but prospectively adopts possible future extra-legal or even illegal Government activity. There is, for example, a strong argument for saying that the Scottish Government's “guidance” requiring (or even advising) the closure of caravan parks at certain times during the pandemic was misconceived and unlawful. This whole concept of legalising future unauthorised activity would no doubt be held void on judicial review (see, e.g. Wheeler v Leicester City Council [1985] AC 1054]).


(1) The Scottish Government's interpretation of most COVID provisions is identical to that of the UK Government, so it is instructive to see that the latter spells out its general acceptance of “caravan parks” as being one coherent category, despite involving both model 2 licensed caravans and model 3 holiday-let caravans – see Ministry of Housing, Communities & Local Government, “Business Rates Expanded Retail Discount 2021 Coronavirus Response – Local Authority Guidance” (2 April 2020), para 13: “We consider... self-catering accommodation to mean: used for the provision of living accommodation as a business... Caravan parks and sites”.

The Relief Regulations do not use the term “as a business” – this is simply assumed by virtue of the fact that the premises pay business rates.

(2) District valuers understand the distinction between licensed and holiday-let caravans (Valuation Office AgencyRating Manual, s 185: caravans, caravan sites, parks and pitches, 5.3 Rateability of Caravans). Caravan and pitch are valued as one unit, together with value for use of common parts (Non-Domestic Rating (Caravan Sites) Regulations 1990 (SI 1990/673)). However, the exemptions in the Relief Regulations do not draw on that line of approach.

The Author

David Pedley is a retired English solicitor living in Scotland

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