NCC: Jobs and investment already at risk by threat of October VAT hike on holiday caravans

The NCC (National Caravan Council) is continuing its lobby campaign against the imposition of VAT on caravan holiday homes ‘in the interests of the industry, jobs and livelihoods that would be impacted by the proposal’.

The UK caravan industry maintains that Government has grossly underestimated the impact of imposing this tax.

NCC Director General, John Lally, said: “Whilst Treasury considers the many consultation responses, I would urge them to be conscious of the devastating impact this proposal is already having on our industry, namely:

• Redundancy processes underway, as businesses prepare to release significant staff numbers and restructure in anticipation of October’s tax hike
• Holiday parks destocking through the summer and not placing orders
• Parks reducing/shelving investment projects, to the detriment of the UK tourism offer
• Immense uncertainty amongst all businesses within the industry supply chain.”

To date 77 MPs have signed Graham Stuart’s Early Day Motion, which calls on the Chancellor to withdraw the proposal. Earlier this week, a Parliamentary petition, with tens of thousands of signatures representing 60 constituencies, was delivered to the House of Commons by 27 MPs.

In response to Government’s consultation (closed on 18 May) on the imposition of 20% VAT, the NCC and the British Holiday & Home Parks Association (BH&HPA) submitted an industry response, setting out its view that:

• Government’s impact assessment does not recognise the true fiscal, economic and social costs of applying VAT at the standard rate to the sale of holiday caravans
• Standard rate VAT on holiday caravans does not remove an anomaly but creates one
• The current legislative proposals are unworkable (a number of legal arguments were put forward to demonstrate its unfeasibility).

The NCC’s Director General, John Lally, said: “If people do not buy caravans a whole chain reaction is put in place and without a doubt parks, distributors, manufacturers and suppliers will feel the pain. Holiday destinations across the country will be hit and British tourism receipts will take a dive. Therefore it is critical we engage in a constructive dialogue with HMRC & Treasury on these issues.

“Without doubt, if implemented, the measure will cost the Exchequer more than it will earn, destroy livelihoods and take jobs from those who most need them,” Lally adds.

A final decision regarding the imposition of 20% VAT on the sale of caravan holiday homes is expected in the summer.


Editors’ notes

The NCC (National Caravan Council) is the UK trade body for the tourer, motorhome, holiday caravan and park home industries. It represents the entire industry supply chain, including amongst its members all major manufacturers, distributors, parks operators and a range of businesses that supply the industry.

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). The Government consultation was extended but closed on 18 May 2012.

KPMG, in association with CIL and Oxford Economics, were commissioned by the NCC and the BH&HPA to assess the economic impact of Government’s proposal to impose the VAT on the sale of new holiday caravans. More details on the findings of the Economic Impact study are contained in the joint NCC and BH&HPA press release of 21 May 2012.

The NCC and BH&HPA, in its consultation response put forward a number of robust economic and legal arguments against the proposal. Legal advice suggested that the new definition would give rise to new anomalies and litigation in the already complex area of VAT. Using Government’s suggested definition of British Standard BS3632 to define residential caravans (which are to remain nil-rated) is also fraught with difficulties.

NCC Press contacts: Jackie Duffy, mobile: 07833 431 568 email
Louise Wood, mobile: 07824 994 690 email: