Reduced VAT ‘not a fantasy’, claims Luke Johnson

By Becky Paskin

- Last updated on GMT

Related tags: Vat, Hospitality industry, Luke johnson

Luke Johnson has urged the UK's large restaurant chains to back the cause to reduce VAT
Luke Johnson has urged the UK's large restaurant chains to back the cause to reduce VAT
Serial investor Luke Johnson has claimed a reduction in VAT for the hospitality industry is not a ‘fantasy’, and has urged the UK’s larger chains to put pressure on MPs.

Speaking at the R200 conference yesterday, organised by BigHospitality’s sister publication Restaurant magazine, Johnson said a reduction in VAT is key to unlocking the industry’s growth potential.

By taking example from the French and Irish hospitality industries, each of which has reduced VAT to 5.5 per cent and 9 per cent respectively, the UK could boost tourism, create jobs and increase government tax revenues, Johnson claimed.

“Supermarkets and shops selling uncooked food and drink pay no VAT but restaurants pay 20 per cent,” he said. “This is inequitable and unfair, and we should lobby as an industry, as a group of professionals together, to get this rate cut as they have successfully done in France and Ireland.

“It has been shown to work abroad and can make us a much more competitive industry. We should all be contacting our MPs and the media to push for this to happen now.”

While the industry is largely in agreement for a reduced level of VAT, Johnson, who has stakes in Giraffe, Feng Sushi and Patisserie Valerie, criticised the UK’s larger restaurant chains for their perceived lack of interest in the campaign.

“They are mad. For us there can only be an upside in winning this. We’re already paying 20 per cent VAT so if we lose, what have we lost really? The chains have got the resources and must be prepared to put pressure on the politicians and civil servants and insist they act.”

A single voice

His remarks come just weeks after Jacques Borel, the man behind the 5.5 per cent VAT cut for restaurants and pubs in France, predicted a targeted reduction in VAT could be achieved in Britain by 2014.

At the time he claimed such a reduction would only occur if all sectors of the industry pulled together to lobby the government before the next general election is called.

Ufi Ibrahim, chief executive of the British Hospitality Association, told delegates at the R200 conference that price impact research conducted by Deloitte along with 28 global case studies of the positive effect of reduced VAT, had been presented to government.

“We had a meeting with the Treasury two weeks ago with the model to understand their concerns,” she said. “We want to push them to reach a decision in less than five years. It took 42 years in France and we hope it wont take that long here. We’re pushing very hard and we have our foot in the door. That process is a significant step because in the past the door has always been shut.”

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2 comments

Reduction in VAT

Posted by Joyce Mead, Scholars Restaurant Darlington,

This can't come quick enough for some of us. The economic crisis is alive and kicking and we desperately need the help of what was said to be a government that wants to come to the aid of vulnerable industries. Well, we're vulnerable yet one of the biggest employers in the UK. We must all get together and lobby together. Could the facts not be posted with a template on what to say so that we all sing from the same hymn sheet on this though? And perhaps one person from each town / city could be nominated to gather the signatures of other caterers to increase the momentum in one go. This could save some of us from closure - it's that vital.

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Reduced VAT

Posted by Paul Carvosso of Carvossos 210 Chiswick High Rd W4,

I am fully in agreement. VAT in supermarkets on uncooked meals not vatable. It should certainly be the same in the leisure industry.

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