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CBI to seek VAT reduction for hotels and guest houses
A CBI spokesman has confirmed that the organisation will seek an emergency cut in VAT on hotel and guest house accommodation in this year’s Budget in a bid to help the sector recover from the impact of the September 11 terrorist attacks and last year’s Foot and Mouth outbreak.
The organisation’s intentions were leaked to The Guardian earlier this week. It reported that the organisation intended to seek a one year reduction in VAT from 17.5% to 5%. The CBI has confirmed that the VAT proposals will feature in the budget submission that is expected to go to the Chancellor in the next three weeks.
It follows this week’s report from the World Travel and Tourism Council which estimates that 10 million jobs will be lost worldwide as a result of the September 11 terrorist attacks.
And according to an Andersen survey published last month London was perhaps the hardest hit of all European markets during 2001 due to its reliance on international tourists, especially those from the US. Occupancy fell to 74%, a decline of 9.6% over 2000. Diminished demand forced the market to enter into price discounting, resulting in a 5.8% fall in average room rates when measured in euros.
A report on TravelMole’s sister site, accountingweb.co.uk, says that Paymaster General Dawn Primarolo has revealed that £186,788 million was deferred in tax for those affected by the foot and mouth epidemic. Between 21 March 2001 and 3 March 2002, the total amounts deferred in respect of PAYE, VAT and Corporation Tax came to £65.236m, £109.598m and £11.954m respectively. These are gross figures and take no account of amounts subsequently paid.
Businesses seriously affected by the foot and mouth outbreak have not been required to recommence payments of deferred liability and the government does not have full details of payments received. It is, therefore, not possible to state how much is still owed by businesses in Scotland and England. However, a sample review of these cases in December 2001 suggests that as much as £78.45 million has been paid voluntarily.
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