Coronavirus: Will the hospitality industry pass on VAT cuts to consumers?

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The hospitality and tourism sectors are set to benefit from a reduction in VAT from today. But will these cuts be passed to consumers?

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Starbucks reportedly said it would pass on the 15% discount for coffee served in company-operated stores and McDonald's said it had recommended its franchisees should cut prices on products such as the Big Mac and Quarter Pounder.Paul Johnson, director at the Institute for Fiscal Studies, added that it might have been better to wait before cutting the tax, to see what the sector's main challenges are.

He said:"Maybe it would have been better to wait until we know whether the real problem is on the demand side - people need to be encouraged to go out and eat - or on the supply side - with social distancing restaurants can't serve enough people."There is also confusion about which items qualify for the VAT rate cut.

Jamie Ratcliffe, head of indirect tax at the consultancy EY, said:"There is a body of case law around when is food not food but catering, and already there is confusion among retail outlets over the categorisation of certain product offerings that contain both hot food and alcohol, for example the pie and a pint offer.

"Other businesses may be unwittingly caught by this - shops that have a restaurant; hospitals that provide catering and all businesses will need to determine if both purchases and supplies fall within the new reduced rate or not."

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GlenvilleTH If my receipt doesn't say 5% Vat I won't be paying the bill.

In a word? No.

We've already noticed the 15% savings aren't being passed on with UK staycations. Don't think this is what it was supposed to happen but it is.

Do I wear a mask the entire day, queue outside a shop for 30 minutes and not be allowed to try anything on......or do I just press buy it now on Amazon? This will kill the high street and millions of jobs

my feeling is that a lot of them will use this to help their finances rather than bring people in through pricing as this was intended

No!! What’s the point in that?

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