Cut VAT says Guild

January 2, 2013 No Comments

The Guild of Bangladeshi Restaurateurs is calling on the Government to reduce the VAT rate for the hospitality industry in order to boost trade. They have written to the Government pointing out that a reduction in the VAT rate would have a positive impact on business, increasing profits for restaurants which will lead to higher taxes collected by the Government.

Increased staffing due to higher turnover would mean less people on the dole, which in turn would reduce the Government’s payouts of unemployment and unemployment related benefits.

In its letter the Guild urges the government to consider the possibility of such a reduction. Pointing out that France has benefitted by reducing the VAT to 5% for its hospitality industry, and this has created more jobs with more taxes collected by the government as a result. The initiative has also been copied in Germany, Belgium and Ireland.

The Guild added: “We understand that for long term future growth, present sacrifices are essential. However, a stimulus from the Government is desperately needed for the survival of the curry industry.”

The famous two-storey Café Naz in Brick Lane has a notice advertising “restaurant lease for sale.”
Trading has already ceased on the ground floor which only a year ago would be packed with diners—just the upper floor is currently in use.

Owner Muqim Ahmed, who is also President of the British Bangladesh Chamber of Commerce, told the Spice Business Magazine that he had put the business up for sale. He is keeping the property freehold, but wants to offload the restaurant and is looking for a buyer. He may consider keeping only half of the premises running as a restaurant to cut down his overheads until he can find a potential buyer.

“I’ve put the Naz on the market—but no-one has the money to take it over,” Muqim said. “The curry trade here is going downhill.”

“Brick Lane is finished. My staff doesn’t want me to sell it—but it is for sale. The industry is not making money. Most restaurants are offering free poppadom and drinks to diners to get business. Some restaurants are still doing the touting activities. In five years time, Brick Lane may become something of the past!”

His rival Azmal Hussain, who runs nearby Preem & Prithi, says he was offered the business, but “can’t afford to run it.”

Azmal explained: “There isn’t the trade to cover the rent and high business rates—it would have to make £15,000 minimum a week just to clear.”

He is vice chair of the Brick Lane Restaurateurs Association which is backing the call for a reduction in VAT he says is crippling the trade.

One restaurant has already closed in Brick Lane. A notice hangs in the window of Dawaar curry house with a warning from a firm of bailiffs not to enter the premises now under its “care and protection.”

Opposite, Odud Choudhury, 43, fears his Saffron curry house could be next to go. “We are in danger of closing down,” he said. “I give it three months, perhaps. “I had to lay off staff—it was a blow. We’ve had an awful time since VAT went up and it’s getting worse.”

Imam Uddin, regional President of the Guild of Bangladeshi Restaurateurs, believes a reduction in VAT rate could make a big difference in helping the whole restaurant sector to survive and grow in this economical climate.

“Many restaurants won’t be around next year,” Mr Uddin warned. “Some have already fallen by the wayside.”

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