Azets: 7.5% VAT rise will hit hospitality sector

Azets: 7.5% VAT rise will hit hospitality sector

Scott Craig

The 7.5% rise in VAT – which takes effect on Friday - will hit the hospitality industry, slow the recovery and even trigger permanent closures, according to Scott Craig, partner and head of VAT at accountancy firm Azets.

The original cut, from 20% to 5%, came into effect on 1 July 2020 but from October 1st will increase to 12.5% and remain in place until 31 March 2022.

The rate applies to suppliers of restaurant services, hot takeaway food, holiday accommodation and admission charges for some attractions.



Scott Craig is warning that the hospitality industry has not had sufficient time to benefit from the cut.

He said: “The UK has slowly reopened but there is considerable economic uncertainty and the hospitality industry is facing the brunt. Businesses have no doubt benefitted from the reduction in VAT but the increase to 12.5% comes too soon.

“Events are now being planned well into 2022 and beyond, and if the reduced rate of 5% had applied for longer many businesses would have improved their financial position and have a better chance of survival. Increasing VAT will reduce their income and unfortunately trigger unnecessary closures that could have been avoided if the rate had been held for another six months.”

Scott Craig is urging business owners in the hospitality industry to prepare for the reintroduction of the full VAT rate of 20% on 1 April 2022.

He added: “It is vitally important these businesses are aware of and prepared for the changes and seek professional advice if concerned.”

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