A Scottish chef is hoping to draw attention to the plight of struggling bars, restaurants and cafés this month by showing his customers just ‘how much VAT really costs’.
Dean Banks is a leading industry figure who currently operates several businesses across the country including Haar in St Andrews, Dulse in Edinburgh and Temple Lane in Dundee.
Like so many others in the sector, he had hoped to see a reduction in the 20% VAT rates asked of hospitality in this week’s government budget but says he was ‘not surprised’ that calls for support have been ‘ignored’ once more.
“It’s so frustrating,” he said.
“We had started to hope sense would be seen, but we should have known better.
“Nobody is asking for a handout from the government, we were just looking for some form of relief.
“I think what the public needs to understand is that even with a 10% reduction, business owners won’t be going off to buy Ferraris or book holidays.
“That 10% would literally be enough to keep some places going or allow them to invest in their businesses and staff.”
On Fridays throughout the month of March, Banks plans to offer his customers 20% off their food bills to provide a clear demonstration of what hospitality businesses pay to the government.
He said: "We do not pay VAT on buying food, however, we have to pay VAT on selling food so it's a closed loop which no longer works for our industry".
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While his venues will ‘of course pay their VAT bill’ on any food sold, the plan is to show diners ‘just what a difference 20 % makes’.
He continued: “VAT is on our receipts, but not everybody will take the time to look at that at the end of a meal.
“I had thought about introducing a menu similar to the ones you would find in America, with standard pricing and VAT next to it and then the total on the bill just to show everyone the actual amount of money that we take in.
“Take for example our fine wine selection which is something that we take a lot of pride in.
“If we sell a bottle for £35, then £7 is going straight to the government.
“In this industry, we’re constantly trying to think of new ways to push sales but the harder we push, the more the government gets.
“The next step for us is going to have to be putting our prices up in April, but we want to make it very clear that’s not our choice.”
Mr Banks is eager to stress that his calls for support are ‘not about party politics’, and instead hopes that using his platform will help to give smaller, independent businesses in Scotland a voice as they struggle to stay afloat.
He said: “All of this is just getting heavier and heavier.
"There are times when you see that bill and wonder if you can go on, so I understand why colleagues are quitting the trade.
“The 20% VAT is difficult, but it’s also only a small factor of the costs we’re having to deal with.
“The minimum wage is going up, food prices are rising and utility bills have in some cases risen by close to 500%.
“When your utility bills are more than your rent, it becomes very difficult to budget.
“I think the time for the government to step in and help the industry came and went this week.
“We gathered to ask for help and it wasn’t given.
“I can’t foresee what is going to happen in the next six months, but I think people will be shocked by the closures that will inevitably follow this."
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While a difficult road lies ahead for the hospitality industry, Mr Banks has said there is still hope for businesses thanks to the continued support of the local communities who appreciate their services.
He said: “When hospitality does well, it benefits Scotland's economy as a whole so I can't understand why reducing VAT is not being seen as investing in the country's future.
"For now, your favourite businesses are still running.
“I understand that people have less money as a result of the cost of living crisis and that their own utility costs and supermarket prices are going up.
“But if you do have the opportunity and the money to spare then now is the time to go out and support your local pub, restaurant or café.
“If you don’t, they could soon be gone.”
A Scottish Government spokesperson said: “The Scottish Government recognises the VAT regime can be used to support businesses struggling with cost increases.
“The power to set VAT rates is reserved to the UK Government. Prior to the UK Spring Budget, the Deputy First Minister asked the UK Government to reinstate a reduced rate of VAT for the tourism and hospitality sector.”
To book for VAT Free Fridays, select a table using the word 'VAT' in the comments section online.
The offer applies to food bills only at Dean Banks at the Pompadour, Dulse Edinburgh, Haar St Andrews and Dune St Andrews.
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