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Mounting calls for VAT cut extension

06 November 2020 by
Mounting calls for VAT cut extension

Business leaders from across hospitality are calling for an extension of the current VAT rate of 5%, which is due to end in March 2021.

Adrian Ellis, general manager of Manchester's 165-bedroom luxury Lowry hotel (pictured) and chair of the Manchester Hoteliers' Association, said: "At the moment, the trajectory to re-opening and the long-term story is very unclear, as no one yet knows when they can return to work and what will happen pre- and post-Christmas."

He pointed out that business will not simply "bounce back come 3 December".

Raphael Herzog, chair of the Bristol Hoteliers Association (BHA), said any further support for the industry would be welcome, as despite being able to furlough staff businesses still have ongoing costs.

He said: "We still have to retain staff to keep our buildings secure, to answer the phones and deal with enquiries, maintain the grounds and ensure that the hotels are regularly cleaned.

"We will have no revenue coming in, yet we have to pay for the staff and that's not even thinking about all the other regular outgoings, like maintenance and building contracts, electricity, pumps for the pool and so on. The £3,000 a month grant is simply not enough to cover our costs.

"For businesses that are being forced to close, we feel that the government should provide more funding to help with these essential costs in addition to paying 80% of the payroll, and businesses can top up the remaining 20% for."

He added: "There are already some reports suggesting it could be extended further. This uncertainty and lack of clarity makes it very difficult for us to plan ahead, so any further support that we can get from the government will be a huge help towards giving our businesses a better chance of surviving."

UKHospitality, the British Beer & Pub Association (BBPA), the British Institute of Innkeeping (BII), the Campaign for Real Ale (CAMRA), the Society of Independent Brewers (SIBA) and Pub is the Hub have called on the government to provide a six-month investment plan to secure the future of those sectors. This includes a reduced rate of VAT for hospitality through the whole of 2021 and a business rates holiday for 2021/22.

UKHospitality chief executive Kate Nicholls said extending the VAT cut and business rates holiday, coupled with extensive government promotion of tourism and hospitality, would be the "bare minimum" required for businesses to survive the winter.

Earlier this week, chief executive of M Restaurants and Gaucho Martin Williams called for the rent moratorium, business rates holiday and VAT relief to all be extended until June 2021, to "give genuinely good businesses in hospitality the opportunity to come out the other side of this".

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