Budget 2013: More support for tourism sector needed

 

As part of a series of blogs previewing Budget 2013, Judith Dugdale, head of Moore and Smalley’s leisure and tourism team, calls for more support for the sector.

 

Many in the tourism and leisure sector have been pushing for a lower VAT rate for tourism-based businesses. Unfortunately, though, the government doesn’t accept that this could be a tax-neutral policy and therefore any drop is extremely unlikely.

 

I would actually like to see an uplift in the VAT registration limit. Increasing the limit to, say £250,000, would give a boost to micro-businesses facing a difficult decision when they get to turnover of around £77,000. To tip over this level would lead to VAT on all supplies so they would instantly lose around £9,000 from the bottom line. So they have to increase sales by a huge amount to make this back. Many feel it is just not worth the hard work and this stifles growth and job creation.

 

Worse still is that some traders, through poor advice or ignorance, don’t realise they are over the limit and therefore HMRC are missing out anyway.

 

Another welcome measure would be simplifying the enhanced capital allowance scheme. This would be a great way to reduce a business’s tax bill, while creating business benefits from future energy savings. Currently the system is stiflingly bureaucratic – for smaller businesses, professional fees in the checking items and processing claims would be almost as much as the tax saving in year one.

 

Given the tourism sector contributes a huge amount to the economy in both jobs and tax collected, you would think it would receive more government money to promote what the UK has to offer. I would like to see a bit more funding given to Visit Britain, Visit England and the local destination management organisations.

 

Recent years have seen under investment in the leisure offering – particularly among smaller businesses and a grant for specific upgrades in the hardest hit areas would help. Smaller operators will use local tradespeople to do the repairs which would boost the local economy. This is a key area at the moment as banks are not as keen to lend to the sector as they once were.