Caravan site owners are bracing themselves for a backlash from customers who will have to pay increased maintenance fees after the taxman was forced to come in line with EU law.
The price rises will be inevitable when a series of concessions in respect of VAT come to an end on 1 January 2012, says accountants and business advisers James Cowper.
Under the change non-metered water and sewerage charges, the recharge of business rates and first-time connection to utilities will attract the 20% standard VAT rate. As a result, caravan site businesses are expected to balance their books by increasing their charges toholidaymakers and private owners.
Efforts were made last December by HM Revenue and Customs to communicate a 12-month period of notice to UK site owners and caravanners before the new rules apply.
But many caravan owners who are resident on caravan sites for part of the year may not be aware of the change warns Ruth Corkin, VAT Manager at James Cowper.
Ruth Corkin said: “We have seen a flurry of interest in the changeover from people who have bought caravans as second homes and let them out as holiday accommodation. People in this position seem to often not be aware of the new VAT rules because site owners have not informed them.
“The extra costs are also likely to be particularly unpopular with caravanners who expect to be able to arrive at a site and connect to services. Matters could get worse if VAT increases and site owners are obliged to further increase their fees.”
Ruth added: “Site owners face a double challenge. They have the difficult task of explaining price rises to customers and at the same time need to ensure their accounting arrangements can cope with the change before the new VAT rules apply.”