Government U-Turn on Static Caravan 20% VAT

Last month we reported the tax change proposed in the 2012 budget to add a 20% VAT cost to static caravan purchases from 1^st October 2011. Lastnight the government went back on their plans after heavy criticism from the caravan industry, but all is not out of the water just yet.

A reverse decision to axe the plan was made lastnight at the post-budget consultation whilst closing VAT loopholes, along with the unrelated VAT addition on hot foods.

The news comes after heavy protest and campaigning from the caravan industry, stating the estimated return of the VAT sum over a period of 5 years would not only equal to less than the UK holiday maker industry brings in from custom each year, but inflict heavy damage on the caravan industry for businesses and jobs alike.

However, a slightly less heavy-handed 5% increase on Static Caravan sales is to be delayed until March 2013. It is yet to be seen if the 5% increase will meet further opposition at a later date, but for now those involved seem happy to celebrate the good news.

John Lally, Director General of the National Caravan Council at the head of the battle against the Static Caravan VAT addition, posted on his Twitter at the news, “A huge thank you to all of the MPs and the Industry who supported the STOP Caravan Tax campaign.”

He continued in a news release via the NCC website, “The Treasury and Ministers listened to our arguments. From the beginning, we upheld Government had underestimated the impact and overestimated the net revenue of imposing this tax.”

“The NCC and BH&HPA working together put forward compelling evidence which clearly showed the potentially devastating effect this tax would have had on an industry that is crucial to the well-being of both domestic tourism and of British manufacturing.”

He concluded, “What we have is a manageable increase for an industry that is in gradual recovery after the credit crisis. This move allows our industry to continue to provide a vital component to British tourism, to be competitive, to succeed.”

The political backlash has already started from the decision.  This morning Labour’s shadow chief secretary to the Treasury, Rachel Reeves, criticised the decision as “a total and utter shambles”.

“These partial U-turns, just a few weeks after ministers were defending the pasty tax and caravan tax, show just how ill-thought through the Budget was and how out of touch David Cameron and George Osborne are.”