Visit to the Holiday Inn, Winnersh


      Yesterday I was invited to see the new Holiday Inn hotel at Winnersh. It is an impressive addition to our local hotels, offering  174 bedrooms, restaurant and spa facilities. I was shown around and invited to discuss the impact of government on the hospitality industry.

        In common with others, the representatives of the hotel told me that 20% VAT is a high tax to have to pay. Many in the hospitality industry favour a cut in VAT on their businesses to act as  a  stimulus to demand.  They told me of the high costs of the carbon levy, despite the work they did on the design to minimise energy use. High energy bills, and high business rates also drive up costs.

         I will explore with Michael Fallon, Business Minister, and Hugh Robertson, the Minister for tourism and lesiure matters, how the government can help to limit the costs of this important business sector. Several of the issues are common to other  sectors as well, and will be familiar to readers of  this general blog.

1 Comment

  1. Rupert Butler
    December 22, 2012

    Mr Redwood, you mention the high business rates which the hotel proprietors have to pay.

    You may remember my mentioning this in response to one of your previous columns. UBR is a tax that I have successfully avoided, but I feel as good about that as an infantryman who avoids the front line. Most businessmen have to pay UBR and accept the fact – just as infantrymen get used to their companions being shot.

    UBR would be seen as a most unfair tax if any of our citizens could escape the socialist presumption that businessmen live to exploit the rest of us. If you compare it to any other tax, it seems extraordinarily heavy:

    a. If there was VAT on rent, 20% VAT would be a high tax – as the hotel representatives tell you. The normal incidence of UBR is calculated at virtually 50% of the rent – and, not being VAT, cannot be offset against VAT inputs..

    b. Seen instead as a property tax, it takes from the property owner more or less 3% per annum. For the small hotel keeper, the hotel might be all the wealth he has. As Conservatives we are all ready to be appalled at any overt tax on our wealth if it should ever be proposed. Here you have such a tax “hidden in plain sight”.

    c. You might look at UBR as a charge on businesses, equivalent to Council Tax, intended simply to fund the services that our local governments provide. It might be argued that trading businesses are to some extent messier and more demanding than private households (and one might ignore the general practice of Councils to charge businesses separately for messy tasks like waste disposal). So how do you explain to the householder, running a B&B from his or her one million pound mansion/town house and subject to no more than £3000 council tax pa, that, by going from six beds to seven, his or her private enterprise becomes a Business for which the UBR is suddenly about £30,000 pa ?

    UBR distorts the economy. Secure businesses like Holiday Inn notice how it affects their flow of customers, but they naturally calculate on distributing the burden among the customers they have. New hoteliers pay it before they have customers; failing hoteliers pay it at the full rate as their last customer leaves; landlords pay it if their property is unoccupied. UBR is an important factor to explain the reluctance of any would-be new entrepreneur.

    Can I get to bite on this topic this time ?

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