Changing Government policy is never quick or easy; in fact, it’s glacially slow. Taking years, not months, requiring endless meetings, expensive data, and a will to never give up.
With the total tax burden on hospitality businesses now exceeding 40%, there is an urgent need for reform of taxation across the board. So, why such a focus on Business Rates and VAT?
In short, these are the two taxes that have the greatest potential to move the dial quickly, if Government will pull the lever, helping restore profitability and creating the conditions for businesses to invest, grow, and create jobs. But we continue to battle on all the other issues affecting the sustainability of every hospitality business.
Business Rates
Thanks to Hospitality Ulster’s lobby and the backing of the industry, the unsustainable rate increases proposed in Reval26 have been paused. A clear example of how a unified voice speaking on behalf of the entire sector can deliver meaningful results.
Backed by the combined goodwill generated by our smaller businesses and the economic influence of our larger operators, we galvanised both political and public support. Had we approached this challenge as a divided industry, there is little doubt that we would have lost.
While we recognise that the pause was not welcomed by everyone, the reality remains that had the revaluation proceeded under the current methodology, many hospitality businesses would have faced unsustainable increases. This would have been damaging for the entire sector, but particularly for our pubs and hotels, where the existing formula used to calculate rates is broken and punitive.
Hospitality Ulster has now begun the process to challenge the current valuation methodology and secure a fairer rates system for our pubs, hotels and restaurants. This will not be easy, and success will depend on maintaining a united industry approach.
To support this work, we have appointed BDO Northern Ireland to lead a team of experts, whilst utilising our partnership with UKHospitality, who are already inputting to both the Westminster and the Scottish Government review of rating models for elements of the hospitality sector. With the likelihood that our Department of Finance will take cognisance of the outcomes from these reviews in any decision relating to our rating system, UKH’s expertise and input will be invaluable.
This work will continue over the coming months, alongside extensive political engagement to ensure our elected representatives understand our plight and the need for a fair rating system for our sector.
VAT for Hospitality
Hospitality Ulster has led the VAT campaign in Northern Ireland for years, but with growing pressure across the UK, this is now our chance for change.
Following extensive work by Hospitality Ulster, which is supported by King's Counsel legal advice we have demonstrated Northern Ireland’s unique and compelling case for a reduced rate of VAT is now at last being debated in Westminster. With the VAT issue across the UK gaining traction and support. Yes, there is still a battle ahead to actually secure the VAT reduction we need, but it is closer than ever before, and we must keep up the pressure no matter what.
You should now be aware of the UK-wide VAT's The Problem campaign, which is calling for a reduction in VAT to 10% across the hospitality sector. For clarity, this includes food, accommodation, alcohol, event ticket sales, etc.
We recognise that securing a reduction will be challenging, especially on alcohol sales. However, businesses that rely on alcohol sales are facing the same financial pressures as other operators and deserve equal support.
As the lead Northern Ireland partner for the VAT's The Problem campaign, Hospitality Ulster is asking every business to get behind the campaign and help us reach our target of one million signatures. Achieving this goal will require support from business owners, staff and customers alike.
Hospitality Ulster are fully supportive a UK wide VAT campaign, but should the UK campaign fall to secure political support and deliver real change, the case for a Northern Ireland VAT cut for competitive reasons on the island of Ireland remains.
Please help us to promote the campaign. A range of marketing materials have been created and can be downloaded here.
One Voice
The challenges facing hospitality have never been greater, but neither has the opportunity to secure meaningful change. Whether on Business Rates or VAT, of indeed the array of other issues we continue to battle on, our success depends on speaking with one voice. A united industry has already delivered results. Thankfully our diverse membership of pubs, hotels, bars, restaurants and industry stakeholders gives that one powerful voice and together, we can continue to make the case for the reforms our sector urgently needs.
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