BHA pushes for reduced vat on accommodation

By Nigel Packer

The British Hospitality Association this week stepped up pressure for a reduced VAT rate for accommodation, as another hotelier fell foul of the existing system.

Norman Hughes of Rockville House Hotel in Edinburgh says his business may have to close because of an unpaid VAT bill for £2,000.

Mr Hughes claims he is unable to pay the bill until the end of the holiday season, but sheriff's officers have valued assets in the hotel and a warrant sale is being considered.

Mr Hughes, who is appealing against the sale, says it will force him to shut.

"The law takes absolutely no account of our ability to pay," he said.

"Our turnover falls just above the £48,000 threshold below which companies don't have to pay VAT, and it's disgusting that we have to pay such a high rate while similar-sized competitors pay nothing.

"It's also wrong that much larger hotels pay the same rate, when they are better positioned to absorb the cost. How can we be expected to compete in these circumstances?"

Mr Hughes wants every company required to pay VAT, to be charged by a sliding scale of rates judged on turnover.

The BHA, meanwhile, continues to press for one flat reduced rate to be introduced for accommodation across Europe (News, 5 June).

"We are lobbying both the Government and European Union for a VAT rate between 5% and 8%," said deputy chief executive Martin Couchman.

"Independent research has shown that a reduced rate would have enormous advantages both for the industry and the economy as a whole."