Accountants and business advisers PKF, want to see more pressure on the government to reduce the value-added tax (VAT) rate on holiday accommodation and leisure attractions in the UK.
Richard Wild, Director of VAT, warned that when the UK’s VAT rate reverts to 17.5% in January 2010, it would mean that UK hotels were paying three times more VAT than in many other European countries.
PKF is therefore encouraging the re-tabling of, and support for, an Early Day Motion (EDM) which urged the government to consider reducing the VAT rate on accommodation and attractions in the UK.
The firm observes that the UK already has a lower rate of VAT, at 5%, to reduce the tax burden in specific areas and that could be extended to include tourism, giving the industry a much-needed boost.
“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,” argued Wild.
In Germany, from the beginning of 2010, the VAT rate for hotels will drop from 19% to 7%. France has long enjoyed a reduced rate of VAT on visitor attractions of 5.5%.
“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.” suggested Wild.
Nearly 40 Members of Parliament 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,” he added.
“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," Wild concluded.
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