Hospitality industry calls for lower VAT

Event venues, hotel operators and catering suppliers are calling on the government to reduce Value Added Tax (VAT) for the hospitality/leisure industries.

In a letter signed ahead of this year’s budget, nearly a dozen signatories from groups such as the British Hospitality Association (BHA), Whitbread, Hilton and Travelodge are pressing for an industry-wide VAT cut of five per cent.

According to Big Hospitality, the groups argue that the current rate of 20 per cent is driving employment and tax revenues away from the UK. Research conducted by Deloitte claims that a cut would put an extra £2.6 billion into the government coffers, whilst additionally generating 79,000 jobs.

On it is noted that the UK is in the minority of countries which aren’t taking advantage of being able to set its own VAT rates to benefit its tourism sector.

For example, visitors to France pay seven per cent and to Spain, eight. The UK – along with Slovakia, Lithuania and Denmark – charges VAT at the full rate for hospitality activities.

Graham Wason, chairman of Tourism and VAT: Making Britain Competitive says that in a global tourism market, the current VAT rate “greatly undermines the UK’s ability to compete effectively.

“This year we have a once-in-a-generation opportunity to steal a march over our rivals with London 2012 and the celebrations for the Queen’s Diamond Jubilee,” he added. “Britain will be at the centre of global attention in 2012 and there is no better signal that we are open for business than cutting this tax on our overseas and domestic visitors.”