Hospitality businesses across Sheffield are backing a national campaign urging the Government to reduce VAT for the sector, with operators warning that the current tax burden is limiting growth, investment and job creation.
The #VATsTheProblem campaign, led by chef and publican Tom Kerridge, is calling for a reduction in hospitality VAT from 20% to 10%, bringing the UK more closely in line with countries including France, Spain and Italy.
Campaigners argue that the UK's hospitality sector faces one of the highest VAT rates in Europe, at a time when businesses are also grappling with rising employment costs, business rates and inflationary pressures.
Among those supporting the campaign is Danny Clare, co-owner of Sheffield venues Two Thirds Beer Co and Kapital, who says the issue is having a significant impact on hospitality businesses operating on tight margins.
"We are burdened as an industry with probably the highest VAT rate in Europe, and it makes such a massive difference," he said.
"As an industry, we work on very thin margins. If we see four or five pence in profit from every pound we turn over, we've done really well."
Clare believes a reduction in VAT would provide meaningful support to businesses across the sector, helping them invest, recruit and grow.
"Tax the profit, no problem. If you've made money, that's absolutely fine," he said. "But the turnover taxes that stop us making a profit, employing more people and growing as a business are hard to stomach.
"This is a serious, major lifeline that's available for hospitality in the UK."
Supporters of the campaign point to lower hospitality VAT rates elsewhere in Europe, including 10% in France, Spain and Italy, and 7% in Germany, arguing that reform would strengthen a sector that plays a vital role in local economies and high streets.
On 1 July, hospitality businesses across the UK will unite to raise awareness of the campaign and encourage the public to support calls for a lower VAT rate.
Businesses and individuals can find out more and sign the petition at VATs The Problem.
