Hoteliers Could Face Up to 14 Years in Jail for Evading Visitor Levy Under New Bill

Hoteliers and other accommodation providers in England who deliberately dodge a proposed overnight visitor levy could be jailed for up to 14 years, under legislation introduced in Parliament this week.

The Visitor Levy Bill, published on Wednesday and given its first reading in the Commons, would let mayors and other local leaders in England add a charge to stays in hotels, B&Bs and holiday lets. The levy would be set as a percentage of the nightly room rate and would apply to UK leisure guests and business travellers as well as international visitors.

Criminal sanctions

Under the Bill, the 14-year maximum applies to operators found to have fraudulently evaded the levy. Penalties of imprisonment or a fine are also proposed for anyone who falsely claims an exemption, or who knowingly makes a fraudulent claim for a repayment.

The Ministry of Housing, Communities and Local Government said the approach mirrors existing enforcement regimes, citing VAT evasion as an example. A spokesman said such powers were expected to be used in “a very limited number of situations” and that those who made minor errors would not face prison.

Local control over rates

Individual authorities would decide their own rate. Labour metro mayors have previously indicated that a ceiling of five per cent would be a reasonable limit, while still giving them a meaningful new source of income. Conservative and Reform UK mayors have ruled out introducing the levy in their areas.

Ministers say the measure will give local leaders a new way to fund local priorities and follows similar schemes already operating in Scotland and Wales.

Communities Secretary Angela Rayner told MPs that all money raised would stay in the area where it was collected, and could be spent on transport, high streets and visitor attractions. She said the Bill would give local leaders the choice over how to invest, while protecting lower-cost stays and giving businesses a say.

Opposition criticism

Shadow Housing Secretary Katie Lam described the maximum sentence as “staggering” when speaking to The Times. She argued the policy could create a bureaucratic burden for businesses, and criticised a provision she said would require operators offering discounted rates to apply the levy at the full market price.

Ms Lam also pointed out that the Bill was published without an impact assessment, which she said showed a lack of forethought. She said the Conservatives wanted domestic breaks to be cheaper and easier, and that a Conservative government would reduce business rates for hospitality and leisure firms.

Industry concerns

Hospitality leaders have cautioned the Government that the levy risks adding to the pressures on a sector already under strain. Allen Simpson, Chief Executive of UKHospitality, said: “It’s genuinely shocking to see the Government bring forward legislation to hike the cost of a family holiday and risk 33,000 jobs, because that’s exactly what its Holiday Tax Bill will do.

“Mayors will be able to introduce an uncapped holiday tax on Brits and then spend the funds on whatever they like, with no legal requirements to even use the funds to benefit hospitality.

“It is hard-working families that will be forced to pay more for their summer break to prop up local government finances. It is people in coastal and rural communities that rely on hospitality and tourism who will lose their jobs.

“It is not normal to have this level of taxation on a holiday. The UK’s 20% VAT is already the third highest in Europe, and this holiday tax will make it even worse.”