Hospitality VAT campaign continues after Government rules out cut 

A Staffordshire entrepreneur has vowed to continue campaigning for VAT reform after the Government rejected calls to cut the rate on hospitality. 

Craig Wilkinson, owner of Lunar in Barlaston, launched a parliamentary petition earlier this year calling for VAT on hospitality to be reduced from 20% to 10%, warning that rising costs and continued closures were placing otherwise viable businesses under pressure. The petition has now received an official response from HM Treasury following strong industry backing. 

In its reply, the Government said it recognises the contribution hospitality makes to economic growth and social life in the UK, describing pubs, cafes and restaurants as being at the heart of communities. However, ministers confirmed there are no plans to reduce VAT on hospitality, arguing this would come at a significant cost. 

HM Treasury said cutting VAT on accommodation and food and beverage services to 10% would cost around £11 billion a year – roughly equivalent to the annual Child Benefit bill, the Royal Navy budget or a one percentage point rise in the standard rate of VAT. It warned this would require higher taxes elsewhere, reduced spending or increased borrowing. 

The Government also highlighted its temporary Great British Summer Savings scheme, running from 25 June to 1 September, which reduces VAT from 20% to 5% on eligible children’s meals and selected attractions including cinemas, soft play centres and adventure parks. 

Craig Wilkinson, who operates several companies across hospitality, events and technology, welcomed the response but said it failed to address what he sees as the deeper pressures facing the sector. 

He said: “The Government’s £11 billion figure needs much more scrutiny. It appears to be a static estimate of lost VAT receipts, but it does not answer the real question: what is the cost of doing nothing? 

“If hospitality businesses close, the Treasury does not simply preserve VAT income. It loses VAT, PAYE, employer National Insurance, corporation tax, business rates and wider economic activity through suppliers, landlords, town centres, tourism and apprenticeships. 

“The figure also assumes the current system is sustainable. Our experience at Lunar shows why that is flawed. Even after increasing turnover significantly, the maths still does not work because labour, employer National Insurance, food and operating costs rise alongside sales. More turnover does not automatically mean more profit.” 

Craig also said the Great British Summer Savings scheme would have limited impact for most businesses, calling it a welcome but short-term measure that adds complexity for operators already under pressure from tight margins. 

He confirmed he will continue campaigning for VAT reform and said support is growing across the hospitality sector, including backing from UKHospitality and chefs such as Tom Kerridge. 

Craig is due to meet his local MP Dr Allison Gardner in the coming weeks and hopes to build further political momentum. 

He added: “At Lunar, we’ve increased turnover significantly in recent months after reinventing the business with new events, experiences and revenue streams, but rising costs mean the financial pressure remains. It shows this isn’t simply about selling more. Many operators are innovating and growing, but the economics remain challenging. 

“So the question for Government is not just ‘what would a VAT reduction cost?’ It is: ‘what is the net cost after protecting jobs, keeping businesses open, encouraging investment and retaining tax receipts that would otherwise disappear?’ 

“Hospitality is not asking for a handout. It is asking for a tax structure that allows viable businesses to survive, grow, employ people and continue contributing to the economy.” 

The petition remains open until September and will be considered for debate in Parliament if it reaches 100,000 signatures. 

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