Redhand has brought a very interesting twist to this debate. In planning terms the 'use' of the building or structure is what defines what it is. Your friend argued that his use was that of a shed and was accepted. He would need a house on the plot to argue the use is ancillary to the main dwelling. The use that the original poster suggested was that of a room for his kids. that is ancillary to the main house and a caravan is therefore allowed unless the property has had permitted development rights removed.