Caravan ‘death threat’ eased by Treasury after MP pressure

The planned VAT of 20 per cent from October will now only be five per cent and from April 2013 under the Government's revised plans.
The planned VAT of 20 per cent from October will now only be five per cent and from April 2013 under the Government's revised plans.

THE controversial caravan tax, described as a ‘death threat hanging over the tourism industry’, has been watered down in an incredible U-turn by the Government.

March’s Budget announced 20 per cent VAT on all static caravan sales from October, but after heavy criticism and lobbying by MPs, the Treasury announced on Monday that the tax would be reduced to five per cent and its enforcement delayed until April 2013.

Chancellor of the Exchequer George Osborne holds up his red Ministerial Box outside 11 Downing Street before heading to the House of Commons to deliver his annual Budget statement. PRESS ASSOCIATION Photo. Picture date: Wednesday March 21, 2012. See PA story BUDGET stories. Photo credit should read: Lewis Whyld/PA Wire

Chancellor of the Exchequer George Osborne holds up his red Ministerial Box outside 11 Downing Street before heading to the House of Commons to deliver his annual Budget statement. PRESS ASSOCIATION Photo. Picture date: Wednesday March 21, 2012. See PA story BUDGET stories. Photo credit should read: Lewis Whyld/PA Wire

The move would have brought static caravans into line with touring models, which are already subject to VAT.

The National Caravan Council (NCC) predicted widespread job losses caused by an increase of nearly £6,000 on the sale of the average caravan.

Yorkshire MPs led a Parliamentary revolt against the plan, with Chancellor George Osborne forced to defend the VAT on a number of occasions.

David Brailsford, general manager of the Springs caravan site chain in the Sutton area, said the news was a ‘tremendous boost’ for the industry .

“We’re very pleased about the outcome, the Government have been prepared to compromise which I didn’t think they would,” he said.

“The VAT was like a death threat hanging over us all, at least one major manufacturer would have gone and the knock on effect would have forced prices up and made it cheaper for people to holiday abroad.

“Five per cent is a fair compromise, it means we can keep our sales ticking over and continue to invest to develop and improve our parks.

“They may add another per cent or two on over the next couple of years but it won’t have anything like the devastating effect that might have been.”

NCC director general John Lally added: “Without doubt, this move has saved thousands of jobs – and probably averted many business failures.”

East Lindsey District Council actively lobbied the proposal and have said they are pleased with the outcome, and Lincolnshire County Council chairman Neil Cooper also heavily criticised the proposals.

Are you pleased the Treasury have reduced the caravan tax? Email your views to sam.kinnaird@jpress.co.uk.