VAT

VAT Campaign: Brexit could reduce VAT

17-Nov-2016 - Last updated on 18-Nov-2016 at 10:32 GMT

Partnership: trade bodies have backed the campaign to reduce VAT for the trade

Britain's decision to leave the European Union could bolster the arguments for reducing VAT on the hospitality industry, campaigners have claimed.

The VAT Campaign group submitted a letter to 40 Conservative MPs who have expressed support for reducing VAT in the hospitality industry, which stressed that Brexit could majorly benefit the sector.

Lobbyist Chris Guyver said pubs and restaurants were a “bellwether of economic conditions” and could be a key engine for growth.

Logical decision

He said: “Consumer confidence is strongly correlated to the extent people go out to eat and for a drink.

“If expert prediction is correct and the UK falls into recession, then it would be logical for a new government to mitigate the effects of a downturn by using its new tax levying freedoms to reduce the fiscal burden on the hospitality sector.

“VAT is regulated at EU-level. It is compulsory to have a rate of at least 15% and the vast majority of the details of system are governed via Brussels directives.

“The UK can now decide whether to keep VAT and, more importantly perhaps, whether to change the system.”

The British Bar & Pub Association (BBPA), JD Wetherspoon and the Association of Licensed Multiple Retailers (ALMR) have all backed the battle.

ALMR chief executive Kate Nicholls said a new VAT for pubs and restaurants could be designed in a way that reduces the initial cost to treasury while maximising the benefits for the trade, which would give more money back to consumers, while helping to secure existing jobs and create more new ones.

Key driver

She added: “There is a tax iniquity when other industries are compared to UK hospitality, which is a key national employment, entrepreneurial, infrastructural and economic driver.

“The obvious solution would be for the Government to reduce the VAT applying to the sector, bringing tax rates levied on hospitality more into line with other sectors of the economy.”

BBPA chief executive Brigid Simmonds said Brexit brought an opportunity to tackle VAT rates and agreed with Nicholls that it would benefit the sector and create more jobs.

She added: “It is unfair that if you buy a meal in a supermarket, you pay no VAT, but in a pub you do.

“Even a drop in the VAT rate to 15% for eating out, would lead to an additional 78,000 jobs.

“I hope the Government makes this a priority.”