Calls from tourism industry for VAT cut in budget

The owner of a closed hotel and sculpture garden has called on the government to cut VAT for tourism and hospitality businesses.

Industry leaders and a Devon MP are also calling on the chancellor to cut the tax in the budget on Wednesday.

Alex Kleiner, owner of the Broomhill Estate in north Devon, said a 5% decrease would have made a crucial difference to survival.

The Treasury said it would not comment on speculation regarding tax changes.

The VAT rate for hospitality and tourism businesses was reduced during the pandemic but that scheme came to an end in April 2022.

Having closed the hotel, restaurant and sculpture garden near Barnstaple, Mr Kleiner has put the business up for sale.

He said: "A 5% reduction in VAT would have reduced my overall VAT bill by half over the last seven quarters.

"That reduction would have been more than all of my electricity costs."

Mr Kleiner said he had also been hit by a "perfect storm" of high interest rates, business rates and energy costs that had made his business "no longer tenable".

Malcolm Bell, executive chairman of the tourism body Visit Cornwall, said there were "tough times" across the whole of tourism.

He said a cut to VAT would give businesses "the headroom to survive and carry on".

Mr Bell said: "Many are right on the edge due to the cost of living crisis - not only from consumers not being able to spend so much but also from their base costs going up so much."

Ann Maidment, south west director of the Country Land and Business Association, said her organisation wanted a permanent VAT reduction to 12.5% for tourism accommodation and visitor attractions with an annual turnover of less than £1m.

She said: "Currently our VAT rate is not competitive at all and it means costs for tourism businesses are extremely high."

The Treasury said it would not comment on any speculation about tax changes ahead of the budget.

A spokeswoman said the government's work to cut inflation and offer discounted business rates was already helping people in the hospitality sector.

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