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The Government should be put under greater pressure to reduce the VAT rate on holiday accommodation and leisure attractions in the UK, according to PKF.
The accountancy company has warned that when the country’s standard level of VAT reverts to 17.5% on 1 January, hotels will find themselves paying the tax at three times the rate of that levied on tourism businesses in many other European countries, such as France where visitor attractions pay 5.5%.
Earlier this month, the British Association of Leisure Parks, Piers and Attractions (BALPPA) called on the chancellor, Alistair Darling, to cut the rate of VAT paid by the tourism sector, after Germany made the decision to cut the tax on overnight stays in hotels from 19% to 7%.
PKF, which specialises in hotel consultancy services, has backed BALPPA by encouraging the re-tabling of Early Day Motion (EDM) 2209, put down on 2 November by Labour MP Janet Anderson. It urged the House to consider extending the lower VAT rate of 5% to accommodation and attractions, and it received 36 signatures.
‘While many EDMs are not debated, the more signatures that are obtained, and the more profile the campaign receives, the greater the prospect of change – perhaps to be announced in the pre-Budget report,’ said PKF’s director of VAT, Richard Wild.
He added: ‘Some time ago, an EDM calling for the reduction in VAT on energy-saving materials subsequently brought about the extension of the lower rate of [tax] for the installation of energy saving materials, so this is not unchartered territory.’
