VAT: Zero-rated caravans
A new Revenue & Customs Brief (20/10) entitled ‘VAT: zero-rating – changes to zero-rate on caravans’ has been published. The new brief details changes to the dimensions of a caravan that will be eligible for zero-rating.
With effect 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.
This change means that from 20 April 2010, the zero-rate will cease to apply to the sale of second hand caravans that are upto 2.55 metres wide even if they were originally supplied zero-rated.
This announcement follows changes to the Department of Transport regulations to the maximum size of trailers (including caravans) which can be towed on UK roads to bring the size in line with the rest of Europe i.e. to 2.55 metres.
HMRC say that they are currently considering the VAT treatment of the sale of these second-hand caravans and will be issuing further guidance shortly.