A campaign to freeze the rate of VAT for hospitality and leisure sectors at 12.5 per cent has won the support of London accountancy firm Davis Grant.
From April next year, the temporary reduction on VAT in these sectors will end, returning to the pre-pandemic rate of 20 per cent.
This will hold the sector back as it recovers, according to Davis Grant, which is why it is getting behind a new campaign, #VATsEnough.
This initiative has been launched by trade body UKHospitality and is asking for the Government to freeze the current rate of VAT to aid the hospitality and tourism sectors.
It is estimated that setting the VAT rate permanently at 12.5 per cent will create an additional 100,000 jobs and boost investment in the UK.
“Businesses in the hospitality, tourism and leisure sectors have experienced a challenging time and they need as much support as possible to grow and keep local jobs secure,” said Neil Driver, Director at Davis Grant.
“Although the temporary VAT reduction has been a big help, many businesses in these sectors aren’t yet back to full strength and face new challenges as the nation continues to recover.”
Neil said that returning to a 20 per cent VAT rate next year would reduce the profitability of many businesses and cause prices to rise – contributing to the existing cost of living crisis.
Figures show that during the pandemic 660,000 jobs were lost, spending in these sectors fell by £100 billion and 12,000 licensed venues permanently closed.
Neil added: “Whilst the business rates cut announced by the Chancellor in the Autumn Budget will provide further support to these sectors, a freeze on VAT at 12.5 per cent could ensure many businesses stayed open.
“Retaining a lower rate of VAT in the sector will encourage investment and create jobs. This is the reason we stand behind this new campaign.” To find out more about Davis Grant’s accountancy, tax and business services, please contact us.