Expect VAT to rise, warns leisure industry expert
A leading leisure expert has warned the pub sector should prepare for a possible hike in VAT in the near future.
Richard Hathaway of accountants KPMG said the fact that Chancellor of the Exchequer Alistair Darling had not increased the tax in his recent pre-Budget report did not mean further increases weren't far off.
"While all restaurants and bars will be relieved that the Chancellor did not announce a further VAT increase in the pre-budget report last week, it could be a temporary reprieve," said Hathaway, who is head of leisure, tourism and travel at the firm.
"Further increases cannot be ruled out, as a way of reducing the budget deficit regardless of which party wins the upcoming election," he added.
Hathaway was speaking as the Coffer Peach Business Tracker (CPBT), which KPMG backs, reported that recent bad weather had dented the fortunes of the UK pub sector.
According to the CPBT, month-on-month turnover among the UK's bigger pub operators in November was down 7.4 per cent on October's numbers.
While like-for-like sales among the 15 major operators covered by the CPBT were up 1.3 per cent on November last year, the increase in October 2009 had been 2.8 per cent.
CPBT pointed to the fact that last month was the wettest November since 1914, although it said it was the eighth consecutive month to record positive like-for-like sales growth for the companies it followed.
Total year-on-year turnover for the companies tracked rose 3.5 per cent, after a 5.7 per cent rise in October and a 5.2 per cent increase in September.
David Coffer, chairman of the Coffer Group which also partners in the CPBT, said like-for-like sales figures "are against relatively weak comparables last year. They demonstrate that the hospitality sector in common with the rest of the economy is struggling to recover".
But amid the gloomy statistics Coffer sounded a positive note: "Although most expect to see an extremely slow recovery in trading there is a 'feel-good' factor at the 'coal face' of the industry which may well prove the cynics wrong."
