Northern Ireland hospitality sector appalled by impending VAT hike

The body representing Northern Ireland hotels called the impending value added tax (VAT) hike for the sector “reckless” and warned it could hamper the sector’s recovery.

The Northern Ireland Hotel Federation (NIHF) said its members were dismayed by the return to a 20% VAT rate, due to be introduced today, Friday April 1.

Due to the impact on hospitality businesses of the Covid-19 pandemic and resulting lockdowns, the government reduced VAT for the sector to just 5% in July 2020. As the industry was recovering, it partially increased it to 12.5% ​​last October.

Chief executive Janice Gault said rising costs, which come at a time of rising inflation for a range of inputs, will hit the industry hard.

“There was huge disappointment with the increase in the VAT rate,” she said. “Unfortunately, businesses have not taken full advantage of the reduction due to prolonged closures and strict restrictions. Fast forward to April 1, 2022, the reality of a return to the 20% rate has been met with dismay.

She said increased costs will have to be passed on to customers.

“Raising the price of a service is never easy and can test customer loyalty,” she said. “Adding to the hotel experience can increase costs, but helps attract and retain customers.

“However, a punitive VAT increase, without recognition of the challenges faced and the commitment shown, is a reckless and ill-thought-out action with repercussions that can hinder restoration.”

The irony of the VAT hike implemented on Friday did not escape the NIHF.

“Friday is April Fool’s Day. It’s commonly known as April Fool’s Day, a date when pranks are staged and lots of pranks are played. For the hospitality industry, it will mark the return at the normal VAT rate of 20%; if only it were a farce staged by the Treasury instead of a considerable blow to an industry committed to recovery!

Peter M. Doran