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Lower VAT is key to survival, say bodies

Trade bodies including UKHospitality have linked up in a bid to persuade chancellor Rishi Sunak to introduce a permanent lower rate of VAT for the sector.

They are warning that the 1 October rise to 12.5 per cent VAT for hospitality and tourism – coupled with an expected return to 20 per cent in April next year – could well derail the recovery of many businesses.

In a joint statement, the trade associations said: “Businesses are at a perilous stage of their recovery after what’s been a devastating 18 months. Costs are increasing and there are numerous operational challenges for them to deal with, specifically around labour and product supply.”

While the reduction had helped some to simply survive so far during the pandemic, the bodies believe that a return in the spring of 2022 to full level will curtail investment, restrict growth, set back recovery and risk more  job losses.

They added: “We’re now calling on the chancellor to commit to introducing a permanent 12.5 per cent rate of VAT in his upcoming Budget, later this month. This will help protect jobs and continue the support for our hospitality and tourism businesses which contribute hugely to the nation’s economic and social wellbeing.”

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