One-In-Six Hospitality Venues Risk Closure, As Sector Unites Behind VAT Cut

As the Republic of Ireland reduces its hospitality VAT rate to 9% today, new survey results demonstrate the devastating impact of the cumulative cost and tax burden for hospitality in the UK – the highest in the economy.

The survey, conducted by UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping and Hospitality Ulster, revealed almost a quarter of respondents (23%) are operating at a loss, up from 15% three months ago, and 5% say their business is no longer viable.

The result of that mounting cost pressure is that 16% of hospitality businesses – one-in-six – say their business is at risk of failure within the next 12 months.

Respondents are clear that cutting hospitality VAT is the most impactful measure to support hospitality, with 89% backing a cut.

The results are published as the #VATsTheProblem campaign, spearheaded by chef Tom Kerridge, continues to grow, with more than 240,000 backing a petition to cut hospitality VAT to 10%. The UK has the second highest VAT rate in Europe, with Ireland the latest to reduce its rate for the sector.

From today [1 July], hospitality venues will be communicating with their customers about the #VATsTheProblem campaign, urging them to get behind it to support their local.

In a joint statement, the trade bodies said: “We are seeing the devastating impact of hospitality’s heavy tax burden escalate before our eyes.

“The reality is stark. The number of businesses now operating at a loss is accelerating rapidly and too many businesses are facing the gut-wrenching decision of whether they have to close their doors for good.

“Our local pubs, restaurants, hotels, cafes, and many more, are integral parts of our communities. They create millions of jobs, drive growth on our high street and support cities, towns and villages. The loss of these businesses is more than just numbers on a spreadsheet, it tangibly impacts our society and our culture.

“The Government needs to act to back hospitality and reduce its tax burden. The sector is united – a cut to VAT is the most impactful way to support hospitality and drive growth. The Government should cut VAT to 10%, bringing the UK in line with Europe.”

Tom Kerridge said: “This shows why we need hospitality VAT cut to 10%. Our hospitality culture in the UK is the best in the world, but we continue to be hit with unfair levels of tax.

“Just look across Europe. Almost every other country recognises the need to support hospitality with a lower rate of VAT. Now, Ireland becomes the latest.

“240,000 people agree with us that the Government should act to bring hospitality VAT down to 10%, in line with Europe. VAT is the problem – 10% is fair for hospitality.”