Issue 29 July/August 2009 £2.75
Attitude shows ‘sad lack of vision’
VAT cut call on holiday letting By Christina Eccles TOURISM bosses are being urged to lobby the government to cut VAT on holiday accommodation to five per cent – bringing the UK in line with other European destinations. The rate is currently 15 per cent and due to rise next year to 17.5 per cent – much higher than the five per cent rate seen in countries such as Portugal. And after plans were announced to remove tax breaks on furnished holiday lettings to bring the UK in line with EU regulations, Billy Cairns, partner at accountants PKF, thinks it is only fair the same idea should apply to VAT. He said a reduction to five per cent would put the UK on an equal footing to other European countries – making it more able to compete and giving the tourism industry a much needed boost. He said: “At the moment, UK businesses are at a disadvantage with countries that can charge reduced rates. This seems wrong. What we want to do is to bring the UK in line.” Billy also said that as this tax saving could be passed on to visitors,
they could end up paying less for their accommodation – and this could be the difference between them opting to go abroad or stay in the UK. He added: “The holidaymaker would be paying less for accommodation and in these times when people are thinking twice about a holiday abroad it could help to swing a few people’s minds. Why should holiday businesses in the UK be at a disadvantage because they have to pay more tax?” Billy is now calling on local tourist boards and other tourism businesses to join forces and ask the government to lower the tax rate. “If we can make prices cheaper for people without affecting the amount of money that goes into the business then surely that has got to make holidaying in the UK more attractive. “We are trying to get people on board to start a campaign to get the government to change it. “We are more than happy to make a representation to the government on behalf of the tourism industry. “If the government had to change the other tax rule then why don’t they also change the VAT rate?”
This year could provide a great chance to get more people interested in British holidays, according to VisitScotland chief executive, Philip Riddle. Scottish tourism is performing well thanks to campaigns such as Homecoming and Perfect Day and Philip (pictured) said with more people choosing to holiday at home, Scotland and the rest of the UK should use it as a chance to showcase its strengths. He said: “I think the industry is doing a great job of coping and in some sectors doing particularly well. There is a big opportunity for people to get more interested in British holidays.” I Full story, Page 19
THE government’s attitude towards the tourism industry shows ‘a sad lack of vision’ the chief executive of the British Hospitality Association has claimed. Bob Cotton said decisions such as cutting VisitBritain’s marketing budget and scrapping the Hotel Buildings Allowance is bad for the industry and will impact on its long term future. He said investment in new and refurbished hotel facilities has been running at £5bn a year and this must continue to ensure that the UK can keep up with its tourism rivals. He said: “The failure in the 2009 Budget to reinstate the Hotel Buildings Allowance or to improve the capital allowances regime and the reduction of marketing support for VisitBritain, just when we should be gearing up for the Olympics, show a sad lack of vision which will have long-term consequences for the industry. Just when we need the allowances the most, the government chooses to abandon them. This just does not make sense.”