Leading global accountancy body, ACCA (Association of Chartered Certified Accountants), has called for a permanent VAT cut for the struggling hospitality and leisure businesses.
As the Chancellor prepares his first Budget, ACCA wants to see him introduce a permanent 5% VAT rate to help ease cost pressures and encourage growth. It says the move would bring the UK's hospitality industry into line with comparable rates globally, many of which are significantly lower.
It says the move would also help to alleviate some of the impact on the sector caused by the increase in employer national insurance contributions, increased minimum wage and changes to workers' rights.
Lloyd Powell, head of ACCA Cymru / Wales said:
“The UK hospitality and leisure industry has been hit hard over the last few years with soaring food and energy prices, reduced consumer spending, increased employment costs and a rising mountain of red tape. Add to this one of the highest tax burdens in Europe and it spells disaster for the industry and the hundreds of thousands of people it employs.
“Our most recent survey showed employment taxes were cited by nearly half of respondents as an area of taxation that has the greatest negative impact on organisations.
“We believe the government needs to do more to support those industries acutely affected by cost pressures. The UK's hospitality 20% VAT rate is an outlier internationally. We want to see a selective reduction in the rate of VAT to 5% to encourage growth, employment and associated tax flow. Making this cut a permanent structural feature would give businesses a good foundation to have the confidence to make long-term plans and investments.”
