HM Revenue & Customs (HMRC) has just announced that it intends to end VAT concessions for caravan owners in 2012.
HMRC states that the decision to charge VAT both on water and sewerage services where actual consumption cannot be measured, and on first time connections to utilities previously zero rated for VAT, is because they are contrary to EU law.
So from 1 January 2012, caravan owners will no longer qualify for:
- The recharge of business rates as outside the scope of VAT
- Zero rate water and sewerage charges where actual consumption cannot be identified
- First time connection to utilities as zero rated for VAT.
Mike McLachlan, Senior VAT Adviser for HMRC, said:
“We recognise that caravan site owners may have to make adjustments and that caravan owners will now incur VAT on supplies that were previously zero rated or outside the scope of VAT. We will offer a 12-month period of notice before the concessionary treatment formally comes to an end.”
HMRC has reportedly already discussed the impact of these changes with caravan representative bodies.
You can read the full HMRC announcement (there isn’t much more to it than this) online.