Context
The question arises from the need to support businesses in Northern Ireland's hospitality sector, which faces challenges due to the current VAT rate and competition with the Republic of Ireland.
Question
What assessment she has made of the adequacy of the temporary reduction in the rate of VAT in supporting the hospitality sector in Northern Ireland. Given Northern Ireland's unique position in the United Kingdom, sharing an open border with the Republic of Ireland where the VAT rate is 13.5% for the hospitality industry, will the Chancellor look to reduce the rate of VAT for the hospitality sector in Northern Ireland—at minimum for a trial, if not permanently—to maintain price competitiveness, safeguard UK jobs and businesses, and make us more competitive with the Republic of Ireland?
Answer from Dan Tomlinson
I understand that the VAT rate in Northern Ireland is different from the rate in Ireland—there are different rates of VAT across Europe. It is important to remember that VAT is a national tax in the UK, at 20% across the country. It is important to have consistency for businesses operating across the UK. Significant cuts to VAT come with significant fiscal costs. For example, halving the rate of VAT on hospitality would cost the Exchequer about £11 billion.
Not addressed: The specific request for a trial or reduction in VAT was not directly addressed.
How: Significant Fiscal Costs
Was this summary accurate? Tell us
How accurate was this summary? (1 = poor, 5 = spot on)