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VAT cut for UK restaurants will not happen, say experts

24 March 2009 by
VAT cut for UK restaurants will not happen, say experts

A reduction in VAT rates applying to restaurants in France will not happen in the UK, industry figures have insisted.

The French government last week won a long running campaign to cut the VAT rate at its dining outlets to as low as 5.5%, after the EU member states agreed a deal extending exceptions on a range of services including restaurants.

The change in law, which was prompted by a bid to help consumers during the global economic downturn, is available to all 27 EU nations.

However, a number of countries including Germany and Denmark have said they will not apply it.

Although France is expected to reduce the VAT rate for restaurants to the minimum 5.5%, it will at the same time abolish relief on social security contributions granted to restaurant owners.

Martin Couchman, deputy chief executive of the British Hospitality Association (BHA), told Caterersearch such a move would not happen in the UK.

"If the Government cut VAT rates at UK restaurants, two-thirds of the VAT income would be lost," he said. "It's not practical politics to push for this here."

Couchman added that the impact on tourism would be minimal as prices of restaurant meals don't have as much of an impact as hotel rates.

This was echoed by Stephen Broome, director of hospitality and leisure for PricewaterhouseCoopers, who said that such a move wouldn't kick start the economy.

"A VAT reduction at restaurants wouldn't drive people to suddenly start to go out for dinner twice often as they do now so the impact really wouldn't be that large," said Broome.

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Caterers may be due VAT refunds after court ruling on takeaways >>

VAT change could cost pub sector £36m to revamp menus and tills >>

BHA calls for deferral of NI and VAT and return of capital allowances >>

By Kerstin Kühn

E-mail your comments to Kerstin Kühn here.

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