UKHospitality backs government plans to reform VAT collection

UKHospitality said new government proposals to reform how VAT is collected from online marketplaces are a step in the right direction towards funding cuts to business rates for pubs, restaurants and hotels.

The trade body welcomes the idea that additional revenue raised from tighter VAT enforcement on online platforms should be reinvested into reducing business rates for hospitality businesses most affected by high costs.

The policy was introduced by the Treasury with a commitment that “any revenue raised will be ploughed into improvements for the business rates system for pubs, restaurants, hotels and other businesses on the high street”.

This follows industry disputes that hospitality businesses are heavily taxed in comparison to online retailers, and that a rebalance must ensue between high street and e-commerce platforms.

Hotels and restaurants are among those facing the most significant increases to business rates following the most recent revaluation, with three-year increases of 115% and 54% respectively.

Kate Nicholls, chief executive of UKHospitality, said: “The Government committed to level the playing field between the high street and online giants, and it’s clear much more needs to be done to achieve that goal.

“We have been clear in our continuous engagement with the Government since the Budget that we need to see concrete action to lower business rates for those businesses most affected. Hotels and restaurants faced the most significant increases in April and pubs, cafes, and many more also continue to suffer from the broken business rates system.”

Nicholls added: “It’s right that any revenue raised from more effectively taxing online giants should be used to support hospitality businesses and I look forward to working with the Government on its proposals.”