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Hospitality sector urges government to stall VAT hike in April

Published:  08 February, 2022

In a campaign organised by UKHospitality, more than 250 business leaders from the service and leisure industries have written to the Chancellor Rishi Sunak, urging the government to keep VAT at 12.5% beyond March 2022.

Petitioning the treasury to maintain the current level (VAT is set to rise to 20% in April), businesses have argued that a rise would stifle their recovery, threatening jobs and livelihoods.

The hundreds of signatories to the letter include business leaders from Apex Hotels, BaxterStory, Bourne Leisure, Caffe Nero, Pizza Hut, The Restaurant Group, The Savoy Hotel Group, Wagamama and Young’s.

The letter to the Chancellor comes hot on the heels of a joint study by UKHospitality, the Tourism Alliance, the British Beer & Pub Association and the Association of Leading Visitor Attractions, revealing the massive benefits if the current VAT rate is retained.

The report found that a permanent rate of 12.5% would bring VAT on hospitality and attractions in line with the European average (at 20% it is nearly double) and set off a virtuous cycle of industry investment and growth, helping ‘level up’ UK regions.

Kate Nicholls, CEO of UKHospitality, commented: “There are many compelling reasons why VAT should be held at the current rate given the current circumstances. However, this is about so much more than an extension to temporary measures in the face of the challenges brought by Covid. It’s about working to establish the right tax level for our world-class hospitality and tourism industries.”

She added: “It is vital, in the interests of competitiveness, job creation, growth and ensuring hospitality and tourism play their full part in driving the economic recovery. We are asking the Chancellor to give companies and consumers room to breathe.

“We have had a very challenging two years where hospitality was hit first, hardest and longest. This industry has borne the full brunt of the economic restrictions due to Covid. Companies have no cash in the bank and are being squeezed from all directions. They must pass costs on or go bust. The only question is by how much prices rise.”