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HM Revenue and Customs Brief 20/10


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Issued 9 April 2010

VAT: Zero-rating - Changes to zero-rate on Caravans.

This Revenue & Customs Brief announces a change to the dimensions of caravan that will be eligible to be zero-rated.

Effect of change

From 20 April 2010 the minimum width of caravan that will be eligible to be zero-rated will rise from 2.3 metres to 2.55 metres. The minimum length will remain unchanged at 7 metres.

All caravans less than 2.55 metres wide (and less than 7 metres long) will be subject to VAT at the standard rate - currently 17.5 per cent.

This change means that from 20 April 2010, the zero-rate will cease to apply to the sale of second hand caravans that are 2.55 metres wide or less and that were originally supplied zero-rated. HMRC are currently considering the VAT treatment of the sale of these second-hand caravans and will be issuing further guidance shortly.

Background and reason for change

The legislation for the zero-rate for caravans is contained in Group 9 of Schedule 8 to the VAT Act 1994 and is directly linked to Regulation 8 of the Road Vehicles (Construction and Use) Regulations 1986 which determines the maximum size of a trailer (including caravans) that may legally be towed by cars.

Following infraction proceedings by the European Commission, the UK now needs to permit the same width trailers (including caravans) to be towed by cars on the public highway as in other parts of Europe. The Department of Transport are therefore amending Regulation 8 of the Road Vehicles (Construction and Use) Regulations 1986 to increase the maximum trailer width from 2.3 metres to 2.55 metres with effect from 20 April 2010.

Since the zero rate for caravans is directly linked to the Road Vehicles (Construction and Use) Regulations 1986, any increase in the size of trailers (including. caravans) has an automatic corresponding impact on the zero rate for caravans. From 20 April 2010, any supply of a caravan with a width of less than 2.55 and with a length of less than 7 metres will be taxable at the standard rate (17.5 per cent).

An update to Public Notice 701/20 Caravans and Houseboats will be published in due course.

Further information may be obtained from the Helpline on 0800 010 9000.

About the Author

Crown Copyright 2010.

A licence is needed to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs under the terms of a Click-Use Licence. Tax briefs are updated regularly and may be out of date at time of reading.

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Article Published/Sorted/Amended on Scopulus 2010-06-14 12:01:34 in Tax Articles

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