Hospitality leaders call on government to cut VAT to help businesses survive

Hospitality leaders have called on the government to cut VAT rates to help businesses survive while operating at a reduced capacity and to save jobs.

VAT stands at 20% for accommodation and food consumed in pubs and restaurants in the UK, higher than many other European countries.

Robin Hutson, chairman and chief executive of Home Grown Hotels and the Lime Wood Group, told The Caterer: “I would have thought a reduction to 10% for all hospitality businesses would be a serious boost for the industry.

“Although some people are predicting bumper times for hospitality with people desperate to go out, I do not see it quite like that, because there’s a balancing factor of trust and confidence.

“I don’t believe we will be running at full tilt for at least the rest of this year, whatever distancing measures are in place, and as well as those constraints on our levels of business we will incur additional costs in supplying PPE and other distancing measures. Anything we can do to alleviate the burden of that would be a boost and mean we’re not opening with one hand tied behind our backs”

In response to the coronavirus crisis Germany has reduced VAT on catering foodservices from 19% to 7% until July 2021. VAT on hotel bedrooms stands at 7% in the country and 10% in France, Spain and Italy.

Jonathan Downey, founder of Hospitality Union and chief executive of London Union, said a similar move in the UK would “help stimulate economic activity for those businesses that survive this” as well as seeing lower prices for consumers and better margins for operators. Nathan Outlaw, founder of two-Michelin-starred Restaurant Nathan Outlaw and one-Michelin-starred Outlaw's Fish Kitchen, both in Cornwall, added that “any help will make a difference” as hospitality looks to reopen under operational constraints.

UKHospitality has also called for a reduction as part of its #Fair4Hospitalitycampaign. Chief executive Kate Nicholls said: “The economy is going to need a considerable amount of support to get back up to anywhere near full strength. Consumer confidence will be key as well, and reducing VAT for hospitality businesses should help on both fronts.”

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