MPs Call For 10% Vat Pilot On Food And Accommodation In Northern Ireland To Support Hospitality Sector And Test Case For UK-Wide Tax Cut

The VAT rate on hospitality food and accommodation in Northern Ireland should be cut to 10% for a trial period of four years to help hospitality and tourism businesses cope with significant cost pressures, and to test the case for a cut for the wider sector across the UK.

The recommendation from the Northern Ireland Affairs Committee comes in a letter sent today to the Chancellor, ahead of next week’s Budget.

It outlines how contributors to the committee’s taxation of hospitality and tourism inquiry highlighted how they continue to face significant cost pressures, over and above those found in other parts of the UK, including in relation to business rates and energy prices.

The committee says a cut in VAT covering accommodation and hospitality food, excluding alcohol, was identified by many of those who gave evidence as a straightforward mechanism to support businesses and help firms to compete on price with their cross-border competitors. Currently, in the Republic of Ireland VAT on accommodation is 13.5% and 9% on food.

A four-year pilot programme in VAT reduction from 20% to 10% in NI may also prove instructive to the Treasury on the case for a cut for the wider hospitality industry in the UK, the committee concludes.

Tonia Antoniazzi MP, Chair of the Northern Ireland Affairs Committee, said:

“We’ve heard about and seen first-hand the very real financial struggles many hotels, pubs, restaurants and caterers in Northern Ireland are having and their desperate need for a helping hand. While the nature of costs and cross-border competition means the situation is biting particularly hard in NI, there are of course similar pressures being felt right across the UK. The Government now has a chance to both give the hospitality trade in NI some much needed relief, and at the same time learn how a VAT cut might make a real difference to businesses elsewhere in the UK and boost overall economic growth.”

The letter makes a series of other recommendations aimed at supporting the hospitality and tourism industry.

The committee calls on the Government to remove Air Passenger Duty on the new Derry~Londonderry to Dublin air route, warning that the Treasury risks undermining a significant new opportunity for economic growth in the north west of Northern Ireland, for the sake of a very small amount of tax revenue.

It also says that customers of approved tour operators should be exempt from the requirement to apply for an Electronic Travel Authorisation.