North Highland Initiative chairman calls for UK government to extend VAT relief deadline to ensure Highland hospitality and tourism trade is not hammered by lasting impact of Covid-19 coronavirus lockdown
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AN influential Ross-shire business leader is urging the UK government to extend VAT relief for tourism and hospitality a full year beyond the January 2021 cut-off.
North Highland Initiative (NHI) chairman David Whiteford made the plea as the sector began to battle back from the damaging effects of lockdown.
Chancellor Rishi Sunak announced a VAT rate cut for hospitality services from the standard 20 per cent to five per cent, from July 15 to January 12 next year.
The measure targets hotels, pubs, restaurants, cafés, bed and breakfasts and other holiday rentals.
But Easter Ross-based Mr Whiteford believes the time frame is too short for a fragile Highland economy.
The NHI brings together farming, business and tourism to address challenges in the rural economy. Successes include the internationally-renowned North Coast 500 initiative.
Mr Whiteford stressed: “Recovery is looking positive, but it is still a very short season.
“I really hope this upturn continues into next spring, and we can see an early start to next season so businesses can recoup losses for this year.
“I want to appeal to the Westminster government to extend VAT relief. I’d make a special case for the Highlands, where the season is shorter than elsewhere
“They’re taking it away in January, but the industry really needs another year to compensate - or some other form of grant-based intervention to return businesses to a sustainable level.”
The NHI is re-launching its promotional ‘Highland Time’ video, showcasing the area’s appeal, with a voice-over from a well known local actor welcoming visitors back.
It is also going to fund new signage for communities based on the #respectprotectenjoy social media theme, with added emphasis on supporting local outlets.
Jock Urquhart, of the award-winning Ceilidh Place in Ullapool – with rooms, restaurant, bookshop and art gallery – wholeheartedly backed the VAT relief call.
The family-owned firm uses surplus summer income to give full-time staff the dignity of year-round employment.
Given the adverse impact of lockdown, it faces a challenge in maintaining that ethos.
Mr Urquhart said: “Realistically, the west coast hospitality trade is looking at three ‘winter’ seasons in a row. It will take us a while to get back on an even keel.
“We’ll have to be extremely cautious in our overheads.
“An extension of VAT relief would get a lot of support across the industry. Anecdotally, most of our customers appreciate the VAT cut is to support the industry and prevent price increases, rather than lower them.
“Extending the VAT cut beyond January would be welcome, for sure.”
But Highland economist Tony Mackay warned: “The VAT cut is to be welcomed, but I think it is very unlikely that the UK government will agree to extend it.
“It is obviously too soon to assess the beneficial impacts of the current reduction. Many local businesses will use the additional revenue to compensate for income lost.
“A special case could be argued for the Highlands because of tourism’s seasonality, but other areas would argue the same.”
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