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Night time sector again calls for VAT relief to support post-pandemic industry on the brink

By | Published on Monday 4 July 2022

Night Time Industries Association

The UK’s Night Time Industries Association has again called on the government at large – and the Chancellor Of The Exchequer in particular – to reduce the VAT rate on events and entertainment, arguing that, with inflation pressures, surging energy prices and a cost of living crisis, the night-time economy is struggling to recover from the COVID period.

The VAT rate on tickets was reduced during the pandemic, and reps from across the live music industry have been calling for that reduction to be reinstated, arguing that – although there are no longer any COVID restrictions in place – the sector needs further support as it seeks to recover after two years of lockdown measures. And all the more so given the other economic pressures now in play.

In its latest call for more government support, the NTIA states: “There is a temptation to think that, because restrictions have now been removed, the [night-time] sector will simply snap back to its pre-pandemic strength. But sadly, given the additional cost inflation pressures, this is a long way from the truth, and many businesses – who are already burdened with significant debt hangovers from the pandemic – are now facing huge pressures from the wider economic landscape”.

Citing a survey of its membership, the NTIA adds that many businesses have seen their operating costs increase by 30% compared to pre-pandemic levels, with nearly a half of the night-time companies surveyed barely breaking even and uncertain if they will survive the next twelve months.

With that in mind, the trade group is calling for a reduced 12.5% VAT rate to be applied across the hospitality, late night and event sectors for the next twelve months, as well as seeking a commitment that ongoing business rates relief schemes will be continued beyond the current financial year and asking for an energy price cap for small and medium sized businesses.

Says NTIA CEO Michael Kill: “Time is running out for the government and the Chancellor to put measures in place to stem the spiralling costs of living, with inflation reaching 9.1%. Hospitality, night-time economy and events industries are facing a bleak summer, and uncertainty to what the future holds, with no clear strategy presented by the Prime Minister on when or how this crisis will be averted”.

“Businesses are struggling to meet operating costs, in many cases barely breaking even, with staff and customers starting to feel the impact of cost of living”, he goes on. “We need decisive action from the government, with the industry calling for an immediate reduction in VAT to 12.5% across the board, with an extension of business rates relief and an energy cap for small [and] medium enterprise businesses”.

NTIA Chair Sacha Lord adds: “The combined, unrelenting pressures of rising supply costs, energy increases and historic pandemic debt burdens are taking their toll on operators across the hospitality and events sector. Having barely recovered from the upheaval of the past two years, they find themselves once again in an uphill battle which, to many, will be simply unsustainable”.

“I echo the NTIA and others in industry in calling on the government to implement a temporary reduction in VAT for the hospitality, late night economy and events sector, in order to save the livelihoods of the hundreds of thousands of staff across the UK that the sector employs”, he goes on. “I continue to urge the Chancellor to show greater willingness and support the small and independent businesses across the UK who are the backbone of our economy”.