If Prime Minister Rishi Sunak or Chancellor Jeremy Hunt have any plans to dine in Scotland over the next month, they had best avoid The Pompadour, Dulse Edinburgh, Haar St Andrews and Dune St Andrews – because the chef proprietor of those award-winning restaurants, Dean Banks, has banned them.
Banks is furious at the UK Government’s failure to reduce the 20% rate of VAT payable by hospitality businesses, despite the industry’s hopes that last week’s Budget would finally answer its pleas for help with the financial crisis it is facing.
“I don’t want these guys in my restaurants – they have showed absolute disdain for our industry and will cost jobs and livelihoods,” said Banks of Sunak and Hunt.
“Nothing to do with party politics on this either. They clearly do not value what we do, so these two can eat elsewhere.”
In a pro-active move to highlight the impact that the 20% VAT rate has on hospitality’s bottom line, Banks has announced a month of ‘VAT-free Fridays’ offering diners in his restaurants 20% off their food bill.
Dean issued a statement to customers stressing that, while he and business owners like him were obliged to pay HMRC 20% VAT on all the food they sold, unlike other industries, the bills they pay for the ingredients of those meals contains no VAT element, so they can’t claim anything back to balance their exposure to sales VAT.
“It’s outrageous, the injustice of it genuinely brings me to tears,” said Banks. “I’m talking to friends in the trade and they’re closing up or preparing to.
“It is hitting all of us so hard. We aren’t looking for special treatment though that is how it has been spun.
“Most businesses pay VAT on the goods they buy, and charge VAT on the goods they sell. They can claim back the VAT they pay on bought goods so it is sort of cancelled out,” he explained.
“For us, we pay 20% to HMRC on the meals we sell, but we don’t pay it on the ingredients we buy in so we can’t claim it back. It’s just 20% of our income gone every three months.
“It’s brutal. There are times you see that bill and wonder if you can go on, so I understand why colleagues are quitting the trade. I’m not at that stage but I get it.”
After widespread industry calls for the introduction of VAT relief, Banks said he was ‘devastated’ by the lack of good news in last week’s Budge – but not surprised.
“Of course they ignored us. Why would they change now? And this isn’t a politics thing, I’d say the same whoever it was. We had begun to hope sense would be seen but we should have known better.
“I don’t think the public really get why it’s such a big issue for our trade over so many others, so I wanted to explain why it’s different – and show how much of a difference 20% is,” he said.
“So come into one of our restaurants over the next four weeks on a Friday and we’ll give you 20% off your food bill.
“To be clear, we will of course pay our VAT bill on that food as well – this is simply to show just what a difference 20% makes.”
