Thursday, 19 April 2012 12:40 PM
NCC continues battle against ‘Caravan Tax’
John Lally says:
“A cross-party group of MPs came close to defeating the Government last night over the ‘Caravan Tax’. This is about jobs, support for manufacturing and keeping the tourist pound in Britain. Government has significantly underestimated the impact and overestimated revenue .”
• Vote in House of Commons shows significant cross-party support against the proposed introduction of 20 per cent VAT on sales of caravan holiday homes
• Trade body fears job losses and slump in tourism income
• Industry gathers impact data to respond to HMRC consultation – deadline extended to 18 May
A cross-party group of MPs came close to defeating the Government last night over the ‘Caravan Tax’. Their passionate opposition to the proposed introduction of 20% VAT on the sales of caravan holiday homes convinced the Government to extend the formal consultation period deadline. Government’s majority was cut by more than two-thirds to just 25.
The NCC (National Caravan Council) and the industry had lobbied hard to warn of potentially dire consequences for both British manufacturing and for UK tourism if VAT at standard rate is imposed on caravan holiday homes in October.
The NCC is working with caravan businesses and consultants KPMG to calculate the cost to the economy; this is in the belief that Government has significantly underestimated the impact (which HMRC forecast at 30% reduction in demand) and overestimated the potential revenue to be generated (£15m in year increasing to £45m in year 5). In particular, the effect of job losses across the supply chain and on tourism receipts has been virtually ignored.
Director General of the industry’s trade association, the NCC, John Lally said: “This is about jobs, support for manufacturing and keeping the tourist pound in Britain. We are heartened by the 262 votes against the Bill last night.”
“We have commissioned research to confirm our fears that thousands of jobs will be at risk and it would result in a significant loss of tourism spend. The imposition of VAT will put manufacturing output levels and sales well below those at the worst point of the recession with significant economic and social consequences. It will be manufacturing hubs such as Hull, and seaside and rural areas dependent on tourism, that will bear the brunt of the pain.”
1. The NCC is the UK trade body for the tourer, motorhome, holiday caravan and park home industries.
2. It was announced in the 2012 Budget that, from 1 October 2012, VAT at 20 per cent would be imposed on caravan holiday homes. Caravan holiday homes have been zero rated for VAT since its introduction in 1973 (although VAT has always been applied on the 'removable items' within them, where applicable). VAT at the standard rate is already levied on touring caravans and motorhomes. New caravan holiday homes are priced from £15K with an average cost in the region £30-40K.
3. The Cross Party Amendment for debate in the House on Wednesday 18 April read:
VAT on caravans
To move the following Clause:—
‘No new Order shall be made under section 30(4) or 31(2) of the Value Added Tax Act 1994 which amends the Act to apply to holiday caravans that are currently zero rated.’
The vote was ‘Ayes’ 287 and ‘Nos’ 262 with a number of Conservative and Liberal MPs voting against the Government or abstaining.