Hospitality & Tourism
Published: October 29, 2021 | Updated: October 30, 2021
Restaurateur calls for a permanent 12.5% VAT rate for hospitality and creation of tourism tax
Top Dorset restaurateur Andy Lennox is leading a campaign to extend the current 12.5 per cent VAT rate for the hospitality sector permanently with the creation of a new tourism tax.
The Founder of The Wonky Table, representing more than 1,000 hospitality business in the BCP area and beyond, has launched a petition on the official ‘Petition Parliament’ website.
So far just under 2,000 people have signed the petition.
At 10,000 signatures, the government will respond and at 100,000 it will be considered for debate in Parliament.
VAT for the sector was reduced to five per cent in summer 2020 to help pubs, bars and restaurants after the first Covid-19 lockdown.
It rose to 12.5 per cent this month and is due to return to the 20 per cent rate in April 2022.
Andy, Founder and Owner of Zim Braai in Poole and Bournemouth and Nusara in Christchurch and Poole, described the 20 per cent VAT rate as “a noose around the neck” of hospitality.
He said: “As an industry we face unprecedented hurdles.
“Wages have increased by 20 per cent and food prices by 8.5 per cent since 2018 alongside the costs of operating.
“With VAT and rates rising – and higher debts coming out of the pandemic – this presents a perfect storm of costs that can’t be absorbed by the customer.
“We must fix VAT at 12.5 per cent permanently for hospitality with the introduction of a new 12.5 per cent VAT tourism tax.”
Andy, 34, said the new tourism tax should apply to businesses in:
- Hot food
- Soft drinks
- Hot drinks
- Events and door tickets
He said: “Our aim must be to keep prices low and keep wages rising.
“Help us to beat the squeeze and keep us competitive with Europe.”
Andy said he feared that if VAT returned to 20 per cent the inevitable higher prices would destroy the sector’s ability to create jobs and boost the recovery.
He said: “I, like others in the sector, want to invest our staff.
“We want to increase pay and conditions in our sector.
“It’s already happening.
“A good Head Chef can now be earning a package up to £35,000-40,000 and a good General Manager up to £40,000-45,000.
“This rises even more in city centre locations pushing up to £50k-plus.
“But VAT at 20 per cent simply doesn’t allow us to improve salaries as we wish.
“Let us make a decent profit so that we pay Corporation Tax.
“It will be so much fairer as well as a better result for the sector and for the government.”
A powerful coalition of the country’s hospitality and tourism trade and membership bodies has also called on the Prime Minister to keep VAT low for businesses in these vital sectors.
Co-ordinated by UKHospitality, headed by Kate Nicholls OBE, pictured right, a letter to Chancellor Rishi Sunak argues that keeping VAT at its current rate of 12.5% for these sectors will:
- Help to accelerate the UK’s economic recovery from the pandemic
- Safeguard the future of businesses and millions of jobs
- Allow firms to invest in their workforce with higher wages and improved training opportunities
Signatories to the letter include: UKHospitality, Sacha Lorde London First, New West End Company, Night Time Industries Association and the Scottish Tourism Alliance.
Andy was also among the signatories as well as The Wonky Table.
With businesses feeling the impact of a multitude of cost pressures and labour shortages, the letter says that keeping VAT at 12.5% on a permanent basis will help keep prices more affordable for customers and unlock investment in local communities and coastal areas across the UK.
The letter adds: “We will be critical to your levelling-up agenda and we are eager to play our part.
“To facilitate our role there is one crucial lever that government can pull – to keep VAT at 12.5%.
“The pressures on business at present are well-documented and are already creating inflationary pressures.
“Increasing VAT for our sectors back to 20 per cent will push many to breaking point.
“Retaining it at 12.5% will relieve upwards pressure on prices and will leave people with more money in their pockets, while delivering on our shared goals.”
Andy said his contacts at local and national level suggested that it was unlikely the Chancellor would announce a permanent VAT rate of 12.5 per cent for the hospitality sector in this week’s Budget but would confirm temporary measures now.
However, the industry is hopeful the government would agree to the permanent cut before it’s due to return to 20 per cent in April 2022, he added.
- The petition can be signed here.