Brussels slaps extra VAT burden on UK caravans 
Love them or loathe them, caravanning is a popular way of spending the holidays for more than 1 million people in the UK. But from 20 April this year, those wishing to buy a caravan may find that it will cost them more thanks to a ruling from Brussels, says Thames Valley accountants James Cowper.
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. The ruling was accepted by HMRC on 15 April and will come into effect from 20 April.
Terry Dockley, VAT director at accountants and business advisers James Cowper said: “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.”
The reason behind the change however goes much deeper and is likely to be felt by all road users, warns James Cowper. The increase in VAT on the sale of caravans is just a side-effect of changes to legislation that lift limits on the width of trailers that can be towed on UK roads.
“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, bring the UK in line with the rest of Europe,” explains Terry. “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.”
Terry adds: “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.”
Terry Dockley, VAT Director, James Cowper LLP, Tel: +44 (0)1635 35255 or email tdockley@jamescowper.co.uk
19.04.10