Higher VAT 'could shut restaurants in Republic'
Restaurants and cafes in the Republic will be at risk of closure as higher VAT bills fall due at the end of this month, it's been claimed.
Aiden Murphy, a partner at accountants Crowe, said rising rents and an increase to the Republic's minimum wage will also add to the pressures.
Despite economic growth and a boom in retail spending in the run-up to Christmas, restaurant operators' fixed cost base rose significantly in 2019, while at the same time competition drove down turnover for individual outlets as much as 10% to 15%, he said.
That has left businesses with less cash on hand to tide them through the traditionally lean first three months of the new year and with bills falling due.
"The cash buffer we are seeing in restaurant businesses is not as high as in other years - and the higher VAT rate is now falling due.
"Large numbers may be forced to close, especially if they cannot see where growth is going to come from in 2020, and operators who have taken on a second or third unit will be forced to scale back," he added.
The last week of January will see Vat bills for November and December due to be paid at the higher rate that kicked in last year. The rate for hospitality businesses jumped from 9% to 13.55.
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Owners may need to lean on landlords or suppliers, or ask whether there's a deal to be done with the Revenue, he said, and they may need additional debt facilities for the slow months of January February and March.