The Government is being urged to cut the VAT rate on UK holiday accommodation and leisure attractions.
Accountants and business advisers PKF is encouraging the re-tabling of and support for an Early Day Motion which called on the Government to consider reducing the VAT rate on accommodation and attractions in the UK.
PKF VAT director Richard Wild warned that when the VAT rate reverts back to 17.5% in January it will mean that UK hotels will be paying three times more VAT than in many other European countries.
The UK already has a lower 5% VAT rate to reduce the tax burden in specific areas, and that could be extended to include tourism, giving the industry a much-needed boost, according to PKF
“We have one of the highest VAT rates in Europe in respect of tourism yet, whilst other countries are considering and implementing reductions in the rate of VAT in this area, the UK’s VAT rate is set to increase,” said Wild.
The VAT rate for hotels in Germany will drop next year from 19% to 7%. France has long had a reduced rate of VAT on visitor attractions of 5.5%.
Wild said: “While many EDMs are not eventually debated, the more signatures that are obtained, and the more profile the campaign receives, the greater the prospect of change – perhaps to be announced in the Pre-Budget Report.”
Nearly 40 MPs signed the initial EDM on VAT and tourism.
“Some time ago, an EDM calling for the reduction in VAT on energy-saving materials subsequently brought about the extension of the lower rate of VAT for the installation of energy saving materials, so this is not unchartered territory,” added Wild.
“This Early Day Motion has again brought to the fore the damage suffered by the UK tourism sector as a result of the comparatively high rate of VAT.
“Whilst the motion has fallen, due to the end of the last Parliamentary Session, we would encourage its renewal for the 2009/10 session, and for Members of Parliament to sign the Motion and highlight the need for a proper debate on this issue.”
by Phil Davies
