Extending 5% VAT cut ‘not enough’ to save hospitality, says tax pro

Sue Rathmell, indirect tax partner at MHA MacIntyre Hudson, has said the UK needs “bold and sweeping measures” to save the hospitality sector, calling on the government to do more than just extend 5% VAT measures. 

The statement comes ahead of the March Budget, with many in the hospitality sector urging Chancellor Rishi Sunak to extend the VAT cut beyond its end date on 1 April 2021. 

However, the partner has said this move won’t be enough on its own as most “hospitality businesses have not seen a huge benefit from the VAT reduction since it was introduced last year”.

Rathmell believes this because the UK has been in lockdown for a long period of time and “many people have not been able or wanted to travel away from home and spend money in the hospitality sector”. 

In addition to the extension, Rathmell has said the government should look to “step up and increase support”- suggesting that a further extension of the furlough scheme and government-backed campaigns to encourage people to holiday in the UK should be considered by Sunak.

She said: “An extension of the furlough scheme is essential, together with more government help for the sector similar to the innovative £100m fund set up by the Scottish government to provide grants directly to tour operators, visitor attractions, hostels and other hospitality businesses in Scotland.

“The regrowth of the hospitality sector is also closely dependent on the successful reinvigoration of the UK’s high streets and city centres – encouraging people back into towns and cities will support pubs, restaurants, hotels, cinemas and theatres.”

She added: “The chancellor and the government need to be fearless and creative with how they get the UK back up and running again as Covid-19 restrictions are lifted. Our hospitality and tourism sectors depend on it.”