Budget proposals to extend VAT on sales of caravan holiday homes could cost park owners in the South West a colossal £40 million according to leisure sector experts at Colliers International.
Park owners have until Friday May 4 to protest against plans unveiled by Chancellor George Osborne to extend 20 per cent VAT to the sale of caravan holiday homes from October this year.
Bristol-based specialist Ben Jones, an Associate Director at Colliers International, said: “The budget included a proposal to apply the standard rate of 20 per cent VAT on the sale of caravan holiday homes. They are currently zero rated, although standard rate VAT has always been applied to the removable fittings only.
“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.
“We have submitted our own representations but recommend that all those effected make their voices heard to ensure that the full impact is realised.”
Ben Jones said it was too early to know how severe the economic effects of the VAT increase will be.
He said: “Caravan sales are the most significant source of income to caravan holiday home parks and typically account for 57 per cent of turnover.
“Caravan holiday home parks are major businesses throughout the South West often to be found in rural or isolated areas where they are the major employer in the local community.
“This makes no allowance for the knock-on effects within the community and it is not just the operators who will feel this impact as these businesses are significant employers and these proposals could lead to redundancies.
“Furthermore, the effects will be felt in the wider local and regional economies by suppliers to caravan holiday parks and by other tourism based industries.
“Holiday park operators are known for their entrepreneurial skills and even if these proposed VAT changes go ahead I’m sure the sector will bounce back, just as it did when VAT increased from 15 to 20 per cent.
“Although a share of the additional cost will surely be met by caravan manufacturers and a proportion will be passed on to customers, this still poses a significant setback to a very progressive sector which has so far shown great robustness in times of economic hardship.
“Instead of supporting the sector, these proposals will undermine the hard work by operators and the local communities.”
