Each summer over a million people in the UK take to the roads and enjoy caravan holidays, with 2009 a record year for numbers taking up the pastime. However after a change in the law yesterday, those wanting to invest in a larger caravan may find it costs a lot more – thanks to a ruling from Brussels.
The European Commission has taken steps to force the UK government to charge VAT (at 17.5 per cent) on all caravans under 2.55 metres wide, where previously caravans over 2.3 metres wide were exempt from VAT. HMRC accepted the ruling on 15 April and the changes came into effect yesterday (20 April).
The VAT increase is however part of a much wider programme of changes to legislations which lift limits on the width of trailers that can be towed on UK roads. Chartered accountants James Cowper believes the changes “are likely to be felt by all road users” as the wider vehicles begin to appear in greater numbers.
Terry Dockley is the VAT director at James Cowper and he explained the ruling further. “The European Commission has issued ‘infraction proceedings’ that will see an increase in the width of all trailers, including caravans, to be towed by cars on public highways, bringing the UK in line with the rest of Europe,” he outlined. “From 20 April, the width of towable trailers will increase from 2.3 metres to 2.55 metres, or 8.3 feet.”
“It is because the zero rating of VAT on caravans is directly linked to the Road Vehicles (Construction and Use) Regulations – the legislation that determines the width of towable trailers – that has triggered this change.”
Dockley believes however that the way in which the ruling was enforced was not commensurate with the subject matter of caravan widths. “It is also unusual to see that the European Commission has issued infraction proceedings over this matter; such proceedings contemplate the threat of legal action against a Member Country for a serious infringement, and it is difficult to see this matter as a serious infringement.”
The effect of the European Commission legislation will be felt across the caravan industry, but Terry Dockley believes it will resonate more with the touring community itself.
“The VAT on the purchase of caravans is not normally a subject that generates much interest, but the perception of an interfering Brussels in one of our national past-times is likely to cause much debate around caravan tables at sites across the country.”
