Cumbria-based accountancy firm Lamont Pridmore is supporting calls to freeze the rate of VAT for the hospitality and leisure sectors at 12.5 per cent.
The rate is due to return to the pre-pandemic level of 20 per cent next April. However, Lamont Pridmore says the move will hold the sector back.
Setting the VAT rate permanently at 12.5 per cent will create more than 100,000 jobs and boost investment in the UK, according to a new campaign.
The campaign, #VATsEnough, has been launched by trade body UKHospitality and calls for the Chancellor to ‘lock in’ low VAT permanently to boost hospitality and tourism sectors.
Graham Lamont, Chief Executive at Lamont Pridmore, said: “The hospitality and leisure sectors have been particularly badly hit during the pandemic and need as much support as possible. They are particularly important to providing local jobs.
“The temporary VAT reduction, initially to five per cent and now 12.5 per cent helped keep them going during the pandemic. Now they need further support as the nation continues to recover.
“Pushing VAT back up to 20 per cent could see fewer people eating out and socialising, cause prices to rise and increase inflationary pressures which is bad news for the wider economy.”
During the pandemic, hospitality and tourism were the hardest hit sectors, with 660,000 jobs lost, spending down £100 billion and 12,000 licensed venues permanently closed.
Both sectors welcomed the business rates cut announced by Rishi Sunak in his Autumn Budget, but hopes of a move to freeze VAT at 12.5 per cent were dashed by the Chancellor.
The rise in the VAT rate could put the region’s tourism trade particularly at risk given that many overseas destinations have permanently fixed lower rates of VAT for leisure and hospitality.
Spain for example has a 10 per cent rate of VAT on certain goods and services, such as hotels and restaurants, entertainment and sports activities.
“Lower VAT will help the sector recover from the pandemic and will encourage investment in those businesses and create jobs, and that is why we support it,” said Graham.
Lamont Pridmore said the Government should look again at the serious impact the tax change will have on an industry that is still fragile after suffering arguably the worst of the pandemic.
“Tourism and hospitality businesses are still under a lot of pressure, with many having to repay Bounce Back and CIBILS Loans,” added Graham.
“These issues should not be underestimated and extending the reduced rate of VAT would significantly help improve cash flow in many of the region’s important sectors.”
To find out more about Lamont Pridmore and its own award-winning services, please visitwww.lamontpridmore.co.uk
