Darlington hospitality business owner joins calls for VAT reduction
More than 800 hospitality businesses have written to the Prime Minister
Hospitality business owners across the Tees Valley are backing calls for VAT to be reduced as they say they've been battling rising costs ever since the pandemic.
It comes as more than 800 hospitality businesses have written to the Prime Minister urging him to set out how he will introduce a lower rate.
The campaign called 'VAT’s The Problem' has called for the hospitality VAT rate to be reduced from 20% to 10%.
Zak Ahmed, co-owner of Babul's in Darlington and Barnard Castle, said: "The Government's war on hospitality is going to destroy if not already destroyed the industry. We are being absolutely hammered in every single way you can think.
"I think not only me, I think everybody in hospitality backs this decision. It's a long time coming and there's a big campaign out there at the moment. And look, if you align yourself to hospitality businesses in and around Europe, we pay so much more in taxes. The industry is just not respected how it is elsewhere.
"Honestly speaking it's not a great time to be in hospitality and to be honest, it never has really. It's always been hard. It's just extremely hard now. We all thought after COVID, 'oh, this is the worst it could possibly get', but it is a worse situation now. And that doesn't just boil down to the VAT, it's all the other things that are attached.
"Every tax out there seems to go up and up and up and for us in hospitality at the moment, business rates are going up, national insurance, but when you compound all of these things together with energy prices going through the roof and also the price of goods, everybody's passing the cost on and we as the end producer can't pass the cost on.
"The reality is that 10% reduction could save a lot of businesses. There's some businesses that it will just make them get into breaking even. There's so many businesses that are here, they're at a loss week in, week out, month on end, and that 10% reduction will at least bring them back into not losing money. The margins are so tight at the moment for hospitality.
"We have a restaurant in Barnard Castle and because of these cost rises, we've had to now remove our takeaway service because financially we can't keep this service going. But what that's done in a town like Barnard Castle, it's negatively impacted our community. A lot of people rely on us to be able to have that treat on a weekend and things like that.
"The Government really needs to listen to small businesses and make it easier. The amount of money we contribute to the HMRC, I wish we could keep that in our pocket because we'd all be a lot better off. But yeah, we give more money to the Government than we see ourselves and that's by a long way.
"I would say to the Prime Minister and Chancellor, your predecessors were not very good at their job and hence they're not in the job anymore, but they have absolutely destroyed small businesses and independent hospitality businesses. What are you going to really do about it? Do you want this industry to prosper or do you just want to see pubs, restaurants, cafes all close?"
Businesses involved in the campaign have signed a letter urging Andy Burnham to deliver on his public support in February for a lower rate of VAT for hospitality.
The Prime Minister is expected to host a series of events in No 10 aimed at pitching his Government as a “partner for growth” that can offer a stable platform for investment in the UK.
Reviving Britain’s high streets has been a key focus for him since he took over in No 10, promising to give councils new powers to block vape and betting shops and pledging to cut business rates for pubs.
Notable names to sign the letter calling for a VAT cut include celebrity chefs Heston Blumenthal and Tom Kerridge and restaurants Bill’s, Franco Manca, Pizza Express, and Wagamama.
Mr Kerridge said: “20% VAT is holding hospitality back”, adding that the sector “is different from many other businesses because so much of what we spend our money on is our teams”.
Pubs, bars and brewers among the signatories include Fuller’s, Greene King, Robinsons Brewery, and Wetherspoon’s, as well as resorts such as Center Parcs, Haven, and Marriott International.
UKHospitality said the “vast majority of the signatories are small and medium-sized businesses that operate venues at the heart of their communities”.
In the letter, the signatories told Mr Burnham: “It’s time for a fairer tax burden for hospitality. Without action, closures will only continue to accelerate, jobs will continue to be lost and opportunities for young people reduced.
“More than 370,000 people have signed the #VATsTheProblem petition calling for a 10% rate of VAT for hospitality, bringing the UK in line with the European average.
“A lower rate of VAT for hospitality can turn closures into openings, lost jobs into new jobs, and boarded up high streets into thriving centres of community.
“Alongside your policy to reform business rates for the high street, we urge you to bring forward your plans to deliver a lower rate of VAT for hospitality.”
TV chef Mr Kerridge said: “It’s clear that the Prime Minister understands the importance of hospitality, and I was really encouraged to hear him make the case earlier this year for a lower rate of VAT for our sector.
“The reality is that 20% VAT is holding hospitality back.
“Hospitality is different from many other businesses because so much of what we spend our money on is our teams.
“You can reclaim VAT on a product, but you can’t reclaim VAT on a person.
“That makes a 20% rate particularly tough for a sector where labour is one of our biggest costs.
“And this is all happening at a time when businesses are already dealing with rising wages, energy bills, food costs and business rates.
“We’re seeing the consequences, with businesses closing their doors every single week.
“That’s why hospitality businesses across the country have come together with one simple ask of the Prime Minister: deliver on your pledge and bring hospitality VAT down to 10%, in line with our European neighbours.
“We don’t need another promise. We need action.”
The campaign is supported by hospitality trade bodies and organisations, including UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping and Code Hospitality.