VAT rise damned as 'final nail in the coffin' for sector

Yewar Khan, chairman of the Asian Catering Federation (ACF), which represents 35,000 UK restaurants, has warned chancellor Rishi Sunak that the proposed return to 20% VAT in his 1 April budget announcement will be the "final nail in the coffin" for many hospitality businesses. 

Faced with rising costs in wages, food inflation, utility bills, petrol prices, employers' National Insurance costs and interest rates, combined with the rising cost of living for consumers means the scheduled VAT increase will push many more restaurants out of business.

Khan says that approximately half of the federation's members fear they will not be in business in 12 months' time if the VAT rise goes ahead and other costs remain high.

"Year after year we lobby politicians about the severe and unique problems faced by the catering industry – they listen, nod sympathetically, saying they will do what they can – but nothing happens," he expains. 

Many ACF members feel that because they are mostly small, independent businesses and cannot make large donations to the conservative party, their problems are ignored by the government.

With so many boarded up shops on the nation's high streets as retail trade migrates to the internet, restaurants are viewed as the one sector which is capable of preventing town and city centres from becoming 'ghost towns'. 

The turnover of many small independent takeaway operaots does not reach the £85,000 VAT registration threshold, so they are unable to claim back VAT on inputs. 

"When campaigning to leave the EU, Prime Minister Boris Johnson promised that once free to do so after Brexit, he would cut VAT on energy prices – we call on him to keep that promise," adds Khan. 

The ACF is urging its members to support the #VATsEnough campaign being led by UKHospitality.

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