UK Government Urged to Lower Hotel VAT

by Ella FAIRCHILD on December 2, 2009

The hotel, resort, and leisure attraction industry in the United Kingdom has suffered immensely at the hands of a combination of the global economy and the swine flu virus which have kept customers from traveling.  Some countries have been proactive in trying to help the fledgling industry.  In Germany it was recently announced that the government would reduce the amount of VAT charged to hotels in an effort to stimulate business through lower rates.  Some in the United Kingdom are calling for similar changes that will help the hotel industry get back some of the losses it has suffered over the course of the last two years when occupancy rates have fallen to levels not seen in some time.

Accountants and PFK are calling for support for an Early Day Motion which asked the government to reduce the VAT rate on attractions and accommodations in the United Kingdom.  The director of PFK VAT said that if the United Kingdom reverts back to the seventeen and half percent VAT rate in January that it will mean that hotels and leisure attractions in the United Kingdom will be paying more than triple that of their European counterparts, which puts them at a severe disadvantage in the battle for customers.  He claims that the UK needs to extend a VAT reduction to the tourism industry to boost sales in a very important part of the United Kingdom economy.

While countries like Germany and France now have VAT rates of seven and five percent respectively, the United Kingdom’s seventeen percent VAT rate puts the tourism industry at a distinct disadvantage according to PFK.

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