Discontent as town’s MP backs VAT hike on caravans

PUBLISHED: 12:00 06 May 2012

MP John Penrose voted in support of the change of caravan VAT from zero to 20 per cent

MP John Penrose voted in support of the change of caravan VAT from zero to 20 per cent


A PLANNED Government tax rise on caravans could cost businesses in the South West an extra £40milllion, according to leisure sector experts.

The change in VAT rates from zero to 20 per cent on the sale of holiday caravans will be introduced by Chancellor George Osbourne in October after several MPs, including Weston MP and Tourism Minister John Penrose voted in support of the plans.

It means the cost of holiday caravans will rise significantly, leaving businesses to either foot the bill or pass on rises to customers.

The proposals only affect holiday caravans, not residential mobile homes.

Clive Wilson, owner of a caravan park in Sand Bay and member of the British Holiday Homes and Parks Association (BHHPA), said: “Weston and Sand Bay is the second largest area for caravans in the country.

“These sites help make this area the popular holiday destination it is today, supporting thousands of local businesses and bringing millions of pounds to our area.

“You can imagine our utter dismay when we looked on the Government’s voting list only to find that our Tourism Minister Mr Penrose voted for the increase.”

Catherine Look, director of Oaktree Parks, which owns a holiday park in Uphill as well as others in the South West, said: “If the proposals do go through it is going to be quite devastating for holiday home sales.

“Holiday park businesses do not have a lot of margins to play with so we aren’t going to be able to absorb that increase, so the customer will have to pay.

“It will curtail sales.”

When asked how she felt about Mr Penrose voting for the tax rise, she said: “It is disappointing. As Tourism Minister we would hope that he would be able to support the tourism industry.”

Leisure sector experts Colliers International called on park owners to pressure the Government into a U-turn over the plans.

Ben Jones, associate director at the Bristol-based firm, said: “Our estimates suggest that caravan holiday home parks could lose as much as £900 per pitch or 20 per cent of their profit as a result of the proposals.

“When you multiply this across the 44,656 pitches on 262 parks across the South West alone you are talking about a net cost of £40,190,400.

A spokesman for John Penrose said he takes great interest in the issue, which he stated is a Treasury decision and part of a wider attempt to end long-standing VAT loopholes.

He said Mr Penrose had also been in contact with the BHPPA and is lobbying ministers to get them to address the tourism industry’s concerns.

He also encouraged those concerned to make comments on the proposals’ consultation, which is open until May 18. To view the document, go to www.hmrc.gov.uk or to raise an objection, email david.roberts4@hmrc.gsi.gov.uk

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