Andy Lennox on the Spring Statement 2022: 'This is the perfect opportunity for the industry to rally round and lobby for proper tax reform in the autumn budget'

Spring statement: As the government rightly focused on the War in Ukraine and the cost of living crisis, the hospitality industry's pleas to freeze VAT rates at 12.5 percent were drowned out in the Chancellor of the Exchequer's announcement yesterday

For hospitality, this will have multiple undesirable consequences - prices will rise, further exacerbating the cost of living crisis for consumers, while businesses already at grips with rising food and energy costs and debt repayments will now see the end of the rent moratorium, the increased National Living Wage and National Insurance Contributions (NICs), as well as a return of business rate bills.

But the industry can still campaign for real tax reform ahead of the autumn budget, MD and Founder of the Fired Up Hospitality Group and longstanding campaigner for a reduced VAT rate for hospitality, Andy Lennox, said in an interview with The Staff Canteen.

'Only the fittest will survive'

"The problem is at the moment is that you've got a perfect storm of inflationary costs, the rent moratorium ending, debt repayments kicking in, and now the VAT is going up. It's an incredibly worrying place for the industry to be in," he said.

"It's now going to be seen pretty badly," he added, whereby "only the fittest will survive." 

Smaller businesses will likely bear the brunt of the damange caused, Andy added, as "most of the bigger businesses have done their CVAs, they've already shed their estates. What you'll find is the younger, smaller brands suffering. Independents quietly closing."

To his mind, sticking to a 12.5 percent tax rate for hospitality and leisure would have allowed continued bounceback and a return to profitability for the sector, and the planned increase in the employment allowance for small businesses, offering a tax cut of up to £1,000 for 500,000 small firms, he said, is a mere "drop in the ocean" by comparison.

"Even talking about inflation - [a lower VAT rate] would have mitigated that," he said. "If we're paying 12.5 percent VAT, you'll see growth, and everybody who is working hard fighting the good fight will see the benefits, because you only see the benefit of VAT when you're trading."

"It's not a grant, it's a lower rate of tax."

Holding the Chancellor to account

Now, he said, rather than take the current outlook at face value, we must engage with the government on the tax reform piece Rishi Sunak put forward - as he promised to cut tax rates on business investment later this year.

"We have put forward the tax reform case that VAT in our industry has to change," an argument which the British public and a majority of MPs have already sided with.

"This is the perfect opportunity for the industry to rally round and lobby for proper tax reform in the autumn budget."