Scots chef slashes customer bills to show 'crippling impact' of VAT

Mr Banks has launched the initiative across his five restaurants to illustrate the impact VAT relief would have for cafes, restaurants, bars and hotels and show why he warns businesses are facing extinction across Scotland.

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Diners get 20 per cent off food all weekend at Haar St Andrews, Dune, and Edinburgh’s Dulse Leith, Dulse West End and 1925 at the Pompadour. This applies to advance bookings using the code “20OFF”.

The TV chef is concerned many don’t realise why the complex rules around VAT on buying and selling food are such an issue, and hopes his ongoing social media videos will help alongside this deal.

Mr Banks said said: “The discount shows how much of every item we sell is not actually us charging anything – it’s what we are forced to add as VAT, then pay on to HMRC.

“Of course everyone pays tax and we are happy to do that – but it works differently with VAT on food.

“When we buy food in, there’s no VAT on it but we have to add 20 per cent VAT to sell the food on to customers.

“Most businesses pay out VAT on the things they buy in and collect VAT when they sell on – so it balances out, bills are minimal or even owed a balance back.

“That doesn’t happen for us because of this weird rule on food, so it’s a massive stress with admin, cashflow, pressure and bad feeling because customers think it’s 20 per cent extra profit for us.”

Mr Banks is desperate to get this message across, as businesses continue to shut down at an alarming rate thanks to spiralling costs across the board. He feels lack of understanding is causing division between the public and business owners.

He said: “We are acting as tax collectors because we don’t have a choice but we are not allowed to show this cost on a menu – we can’t display costs with and without VAT. I don’t understand why that is.

“Transparency is so important - so we are running this offer to show how significant that amount on every menu item really is.

“If I buy a lobster for £20 and sell it for £24, the difference is purely the VAT. If I sell it for £25, I am getting £1 – and I have staff, rates, utilities, other food, everything.

“But the customer thinks I am making a fiver so wonders why am I complaining?”

The hospitality sector is campaigning for VAT relief – a reduction in the percentage to help in these crippling times of ever rising costs.

Mr Banks explained how this would help, saying: “The solution is a VAT reduction to 10 per cent. Even if we could offset our food costs against our VAT bill that would help.

“The rise in VAT to 20 per cent may have worked pre Covid but since Covid and Brexit we have had huge cost increases - utilities are the most expensive in the world here.

“We aren’t asking for handouts. We are just asking for you to not increase costs, taxes like putting the NI threshold and business rates up.

“This is about sticking up for everyone who has cafes and restaurants, who have built these things themselves.

“There will be nothing left at all if things don’t change. This is it.”

Of course there is a lot more to the crisis facing the trade than VAT – the massive business rates increases reported across Scotland are a key issue too.

With utilities costs and the rise in minimum wage, national insurance and pension contributions, Mr Banks said “it’s no wonder just about every café, bar and restaurant is right on the edge.

“It really could be the end of almost all restaurants, cafes, bars and hotels in Scotland.

“I wonder if that’s what they want really. High streets are dead, independent businesses are struggling so much.

“Retail parks full of massive corporations are thriving. All the pressure is on the little guys.

“It’s all just impossible – I hope someone listens to us and does something, or there won’t be anything left.”